Shyamal Majumdar: The boiling frog syndrome

HUMAN FACTOR

Companies can't remain on the cutting edge by standing still.

What does a company do when it's coasting on massive backlogs of orders and is an acknowledged market leader in each of the products coming out of its assembly lines? Conventional wisdom says it should consolidate its position further by sticking to the good old management practices that have delivered the goods so far.

But if CEOs follow conventional wisdom, chances are that they are leading their companies into a trap known as the "boiling frog" syndrome. The jargon essentially means the following: If you put a frog in a pan of cool water and then gradually turn up the heat, the frog will just stay put until it dies. But if you drop a frog into boiling water, it will jump right out "" and survive.

In case this sounds like creating a panic where none exists, read Noel M Trichy and Stratford Sherman's fascinating book Control your destiny or someone else will. It is human nature to say, "If it ain't broke, don't fix it." Left to themselves, people will ignore warnings of danger and scorn opportunities to change early and with minimal pain.

There are examples galore. During the mid-1980s, IBM was lulled by its unprecedented profits from mainframes. So the Big Blue missed the shift from big computers to workstations and PCs "" and its performance suffered badly. There's more. Philips spent the 1980s posturing about a coming business restructuring that somehow never came. In 1990, the Dutch company abruptly ousted its CEO and laid off 55,000 workers.

Now look at how some companies have avoided the convulsions that have wracked several of their counterparts. Jack Welch, for example, gave forceful arguments against delaying needed change by recognising the evanescence of GE's prosperity. Welch took over at a time when the company's order backlogs would continue to produce a rich stream of revenues for several years to come, but they obscured the mounting difficulties GE was experiencing in winning new orders for steam turbines and nuclear power equipment. In short, GE was in danger of falling into the classic boiling frog syndrome.

What Welch did was to create dissatisfaction with the status quo so that people worked harder. In the process, one of the things GE did was to turn against the notion of lifetime employment in favour of a stated goal of providing employees with the best training and development opportunities, but only conditional employment. Welch has often been criticised for the obvious inhumanity of walking people who have worked for the organisation for 20 or more years straight to the door, but he felt he had to make the frog jump out of the pot by creating the sense of an internal crisis and articulating a detailed plan of dramatic action to exit the crisis.

To be sure, avoiding the boiling frog syndrome has never been easy. For, there is enough data to show how such change efforts are faltering in organisations all over the world. For example, only nine per cent of the 200 global organisations surveyed by the US-based Saratoga Institute have said that their change efforts have been very successful. Another four per cent termed them moderately successful while over a quarter (27 per cent) described their experience as not very successful, 33 per cent were unsure and 27 per cent said it was too early to comment.

But why do transformation or change efforts fail so consistently? Despite the perception that people lower down the ladder sabotage efforts at changing, the fact is that quite a few CEOs themselves suffer from change phobia. Most of them are still trapped in an incrementalist mindset that change can come only in degrees and lack the energy of their own convictions to change.

So what's the way out since a company can't remain on the cutting edge by standing still? Consultants refer to two main prerequisites for the successful implementation of a change process: CEOs must curb their tendency to play God (the common refrain is Welch succeeded in a different time and era) and organisations must create internal "change champions".

First, the CEO's role. Traditional change management concepts like a top-down approach "" CEOs trying to force their version of change on a reluctant workforce "" only breeds increased resistance and cynicism in an organisation.

If one is to avoid polarisation, with a handful of members of a change management team dictating strategy on one side and the remainder of the company viewing each of the team's move with suspicion on the other, what is required is an "engagement approach", which helps create the critical mass required to avoid the boiling frog syndrome.