Change your firm - but change your culture too

Inside business: process re-engineering may be in vogue, but it won't work unless all staff share the dream

New businesses emerging in the former Soviet Union and China might be surprised to hear it, but to Arun Maira many of the Western companies they are looking to emulate resemble communist states by sticking to centralised planning systems.

Mr Maira, senior executive with management consultants Arthur D Little, claims that - at a time when organisations need to be able to "go in many directions" - a lot of companies force their staff to do the same thing.

Although the era of management by fiat is slowly coming to an end, Mr Maira feels there is still a need to apply market economy principles to large organisations. Companies need to create a position where employees are "pulled by aspiration rather than forced through fear".

Fundamental to this is that the role of individuals is taken seriously. Lip service is paid to the slogan that "people are our greatest asset", but much of the real attention is concentrated on improving processes.

This is all very well and business process re-engineering can be worth while, but it is not enough on its own. As Mr Maira and his colleague Peter Scott-Morgan point out in their book The Accelerating Organisation (McGraw-Hill): "It's dawning on people that processes don't learn and improve themselves. People learn. People can make the improvements to processes that bring results."

The book - subtitled "Embracing the Human Face of Change" - attempts to add some pragmatism to what has become a rather mechanistic approach. Indeed the authors, pointing out that there is a contradiction between process re-engineering and making people the key to improvement, see it as a manual for helping organisations deal with the "damaged resilience" that can result from a re-engineering programme.

They are worried about this for sound business reasons. It is now accepted that change is continual rather than one-off, so it is vital that the people in organisations have the energy and enthusiasm to keep adapting.

This realisation led the authors to the notion of acceleration and the idea that the best companies would stay ahead by changing faster than their competitors, as the Japanese car makers have demonstrated in recent years. Doing this involves "organisational learning", a concept currently in vogue but worthless if it is restricted to knowledge management and running training courses, or indeed becomes the only thing managers worry about. The accelerating organisation has to have lots of other things going on as well as learning. In particular, it must also become more flexible and nimble.

Conversely, with all this activity around, there is a need for some form of stability. The idea of drawing on an organisation's core values is commonly the solution to this. But, at a recent event organised by Arthur D Little, senior executives - perhaps surprisingly - decided that the driver of organisations should be "shared dreams".

Even this notion suffers from the disadvantage of sounding fine in principle but being very difficult to make work in practice because it has to bring in the entire workforce. It requires everybody to align themselves around the basic notions, and then needs to ensure that the senior staff in particular take the appropriate actions needed to make it happen.

Mr Maira and Mr Scott-Morgan point with approval to Microsoft chief Bill Gates's admission that he was wrong to be sceptical about the Internet, and his subsequent decision to throw huge amounts of resources into correcting his mistake by catching up and overtaking the competition.

And they warn that there is no choice in this matter. It is an "absolute requirement" for organisations to be flexible and to abandon control from the centre, says Mr Scott-Morgan. "Whether we like it or not, we're on a treadmill of never-ending change."