Originally published in the November 2002 Issue of Link & Learn.

The latest restructuring has been completed. Members of senior management believes they are seen as caring, trustworthy, and in touch with employees who understand that the downsizing or reorganization or merger was necessary and for the best. Its message to employees: It's now time for everything to get back to "normal."

Right? Not likely.

A more credible scenario finds the work force confused, demoralized, and deeply skeptical. Fed up with being shuffled yet again like an old pack of cards, employees are not at all convinced that the latest change was either necessary or useful in solving the company's current problems or meeting future demand. They see top executives as hopelessly out of touch with what's happening on the front lines and wonder if management has any clue where the organization is headed.

In good times, it's another story. If you have the steady growth or the climbing stock price or the hot new idea, then people in the organization are riding with change on the positive energy of success. But watch what happens when a company (or industry) implodes and the success factor is stripped away. That's when the craziness of change becomes unbearable for a many people.

Lulled by a decade's economic boom, workers now struggle to fully understand that stability is a thing of the past -- that ongoing change is the new reality. And there lies the human dilemma that business leaders face today -- the need to energize employees in what has become a fundamentally unstable business environment.

If change is the new reality, then the only business strategy that's going to produce positive results is one that includes instability as a positive element. If this were a speech, I'd repeat that: "The only business strategy that's going to produce positive results is one that includes instability as a positive element." - And one that embraces change as "business as usual."

Looked at it another way: Newton's rational, predictable universe is no longer our universe. Not in science nor in business. The foundation for both is shifting:

1) From predictability to uncertainty
2) From linear progression to discontinuous leaps
3) From objective to subjective
4) From control to boundaries.


1) From Predictability to Uncertainty
In the Newtonian paradigm, all of nature was stable and orderly - the "clockwork universe." This same view of reality formed the foundation for management thought in the Industrial Age. Disorder, variation and instability were viewed as counterproductive -- and to be avoided at all cost. Management's role in this linear, mechanical organizational model was to create predictability, stability and control.

In the world of science, that all changed with the arrival of quantum mechanics, where physicists studying particles at the sub-atomic level found there is no stability, no predictability.

Similar revelations are occurring in today's business world. New technologies, shifting customer preferences, economic vacillations, unexpected government decrees -- they come seemingly from nowhere to radically alter some industries and make others obsolete. Change is no longer a force in the environment. It IS the environment.

2) From Linear Progression to Discontinuous Leaps
Discontinuity -- that is, nonlinear leaps in a transformation process - is intrinsically threatening. People can accept a certain amount of linear, incremental change, but discontinuous change provokes confusion and anxiety

Most of us are not even remotely prepared for today's epic doses of discontinuity, which alter the very structure of our organizations and compel businesses to operate in unfamiliar new ways. Yet, when properly understood and handled, discontinuity holds tremendous potential for creativity and growth.

Charles Handy, one of the world's leading social philosophers and management scholars, talks about discontinuity as an opportunity for learning: "Ask people. . . to recall two or three of the most important learning experiences in their lives, and they will never tell you of courses taken or degrees obtained, but of brushes with death, of crises encountered, of new and unexpected challenges or confrontations. They will tell you, in other words, of times when continuity ran out on them, when they had no past experience to fall back on, no rules or handbook."

3) From Objective to Subjective
Under the old Newtonian paradigm, the nature of material reality was determined by what could be objectively observed and measured.

Objective observation as the source of all knowledge was first questioned in the 19th Century through the study of human psychology. It took a real blasting in the 20th Century when physicists studying the behavior of sub-atomic particles began to realize that the very act of observing interferes with that which is being observed.

In our business organizations, we are only just beginning to comprehend what it means to move from a purely objective perspective to one that includes the intangible, subjective aspects of business. For example, "quality" was conceived as an objective, statistical concept - accepting only so many flaws per 1,000 or 1,000,000, and so on. Today, that thinking is being challenged by people like Charles Hampton Turner, a professor at the London Business School. "There is no escaping the fact," says Dr. Turner, "that a product or service can be no better, no more sensitive, esthetic or intelligent than are the relationships and communication of those who create the product or provide the service."

If we follow Dr. Turner's statement to its obvious conclusion, quality moves from a purely statistical concept to a relationship issue. Rather than watching the numbers, companies should be looking at the basis of the relationships between customers and employees and between employers and employees. If those relationships are based in integrity and respect, then quality will naturally follow.

4) From Control to Boundaries
How do you control an organization in tumultuous times? The answer calls for radical re-definitions, not only of organizations, but the nature of control. Freedom becomes more important than control. Not freedom that is unlimited or irresponsible, but freedom -- ironically enough - within boundaries.

By setting larger boundaries for employees, leaders find there's less they need to control. Leaders who influence us the most in the future will be those who understand that control is not about regulations and rewards. Nor is it about the struggle to keep people "in line." The most influential leaders will be those who understand that guiding principles and organizational values play the central role in shaping work force behavior, not a list of rules.

Whenever I address management conferences, I take along the one-paragraph Employee Handbook of Nordstrom, the upscale Seattle-based retailer. By now, most business leaders are familiar with the handbook, but few of them have viewed it as an example of creating freedom within boundaries. Here it is:

"Welcome to Nordstrom. We're glad to have you with our company. Our number one goal is to provide outstanding customer service. Set both your personal and professional goals high. We have great confidence in your ability to achieve them. Nordstrom rules: Rule #1 -- Use your good judgment in all situations. There will be no additional rules. Please feel free to ask your department manager, store manager or division general manager any question at any time."

Can you think of a more potent prescription for chaos than inviting everyone in an organization to rely solely on good judgment when making decisions? Yet Nordstrom's work force does not disintegrate into thousands of employees "doing their own random thing." Nordstrom's secret lies in stressing its primary corporate value: Outstanding Customer Service; and then liberating employees in service to that value.

I don't mean to minimize the difficulty people have accepting the fact that uncertainty is normal and change is to be expected. But I do want to emphasize the fact that, difficult or not, change and uncertainty are the only dependable things going for you today.

And because this is the new reality, companies need to communicate this complex and ambiguous reality to their employees. Leaders who continue to position any current strategy as the "right answer" to the challenges of the future are encouraging employees to anticipate a spurious return to stability as soon as the correct structure/product-mix/staffing, whatever, is in place. Or when the economy turns.

And when this state of permanence doesn't result -- when the next "right answer" is announced and last year's strategy discarded -- employees become more skeptical, more resistant, and less willing to believe that company leadership has any idea of what is going on at all.

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