Frontier Exclusive Visionary Interview for hardware, software, system related business and and academia
Frontier Journal (FJ): Professor Porras, let's start from Question 1. In your book entitled Stream Analysis, that was probably published about 20 years ago, you laid down the foundation of the Stream Analysis model for organizational behavior modeling and permutation. Could you give us a brief overview, and I also would like to know, two decades past, what has been changed in organizational behavior compared with two decades ago.
Professor Jerry Porras (JP): Wow, gosh, that's a huge question you've just asked.
Let's see, let me give you the background on the Stream Analysis model that I wrote about 20 years ago. That was an attempt on my part to try to conceptualize a way of looking at organizations that desire change and, most importantly for that book, to try to diagnose what's going wrong or right with that organization. That model starts out with the basic perspective that change is really rooted in individuals' behaviors. We can't begin to change unless it results in the change in the individual's behavior. The model started out with a question of: what is it that drives individual behavior, and how does that relate to the individual sitting inside of an organization. The theoretical perspective from psychology that I was basing my work from was called Social Learning Theory, or Social Cognitive Theory, as it became known as later, but it was heavily based on the idea that people respond to signals, and if the signals are sufficient enough and strong enough, and they interact with people's own needs, then behavior changes.
I'd been asked the question, what's the environment that an individual works in inside of an organization, and, thinking about that and looking at the literature, I came up with the four basic areas in the organizational work setting: the organizing arrangements, the social factors, the technology, and the physical setting. The way this is useful, then, from an organizational standpoint is that these four arenas are a leverage point for change, and when we want to change behavior, we have to change those four arenas, and we have to change things in a way that deliver consistent messages to people about the new behaviors that are desired in the organization.
That's the background for the model. Now, you asked the question, what is different than before. I think that probably the biggest difference that we're experiencing right now is a growing awareness on the part of leaders of organizations about issues of values, and what are the values that should be guiding the organization, and secondly, the purpose of the organization, i.e. why do we exist beyond the making a profit. Clearly organizations have to make profits, but thinking about what the organization's purpose is beyond just trying to maximize the wealth that we return to the shareholders, compared to 20 years ago.
FJ: I see, so, that not only addresses for the profit of an organization but social responsibility. You mentioned change. This is a question I would like to get a brief answer from you: how do we measure the gains and the pains of change, and how do we identify the break-even point of change within an organization in general.
JP: It¡¯s difficult to put my finger on one area that we could determine as the gain of change. We could say improved performance, improved efficiency, improved profitability, improved development of the people inside of the organization. I think all of those are ways of measuring change. The cost of change is, I think, even more complicated because there certainly are estimates you could make of the resources that you put in and the amount of time that people might put in and the cost of all of that, but I think that's just a portion of how to measure the cost. I don't think that we have had a very good way of measuring cost. As a matter of fact, I don't think that people have really concentrated heavily on measuring the cost of change.
FJ: You're coauthor of the book titlFJ: Built to Last: Successful Habits of Visionary Companies. You and your colleagues studied eighteen visionary companies. Based on your observations, what is the success pattern of those examined companies, and if it is a seamless mapping between strategy and execution, how do they do it? Can such kinds of success be duplicated by other businesses?
JP: Well, I think it can, and the purpose of that book was to try to identify what are the key ways that these eighteen companies managed themselves over their entire lifetime of over a hundred years. The perspectives that we identified that started out with the notion of leaders being builders of companies rather than their own brilliance and genius. The company was the target and building a highly capable company was what leaders should be doing. I think that is something that's learnable by other leaders. When you look at the types of companies that these companies were like, they had what we're calling a core ideology, which relates to something I spoke about earlier which is purpose and core values, and they protected that ideology, and at the same time they stimulated change in everything else to environments.
Now strategy has a part. It was certainly important, but not highly central across all the organizations. There seems to be a heavy emphasis on the development of elaborate strategies and then their execution. I think if anything these companies have focused on the execution side of whatever it is they were trying to do.
FJ: I'll follow up with this question. All organizations, whether big or small, are run by individuals, called leaders. Do you think it is the leader that drives the organization, or vice versa? For example, without Jack Welch, would GE have been that successful for the past two decades?
JP: The answer in the particular question you gave is absolutely yes because Jack Welch was just one in a string of CEOs that GE has had that have lead that organization to continue greatness over well over a hundred years. I think what is unique is that it has developed the capability of finding great leaders to lead it. Jack Welch is in my mind as much a product of General Electric as General Electric is a product of Jack Welch.
FJ: Any business as an organization for profit and value is being run by people with the leaders making strategy and the followers executing them under certain business processes. Among organization, culture, value, leadership, and business process, what is the most critical factor to bridge the gap between strategy and execution?
JP: My first answer is alignment. What that means to me is you really have to understand clearly what are the behaviors... when you say execution of a strategy, you have to understand: what are the behaviors that you're going to need to have in the people in your organization in order to execute effectively, and in order to get those behaviors, you need to have an alignment of all the factors that you described. The leaders need organization that these are the behaviors that we want to have you exhibit in order to execute our strategy; the processes need to facilitate those behaviors; the culture needs to support and reward those behaviors, informally reward. There needs to be formal rewards in measurement systems that are aiding in the ways necessary to execute, and the more aligned all of those factors are in supporting and delivering messages about key behaviors, the more likely it is that you are to get the execution that you need to have in order to make the strategy successful.
FJ: Those are all very important. We need alignments. Do you think leaders are made intelligent design or natural selection, and why?
JP: I think leaders need to have certain characteristics in them, but I don't think that charisma, which everyone says a leader needs to have is absolutely necessary for all leaders. What I've observed, and also what we've found in our research in Built to Last is the greatest leaders were the leaders who focused on building a great company; if the leader spent his or her time and energy trying to develop the ability of the people in the organization to do all the things necessary to make it a successful organization; if the leader builds systems, builds cultures, builds strategies, builds rewards that make the organization able to do. Those are the great leaders. Those are the ones who build organizations that endure way past them.
There are many leaders who are very charismatic and who are very larger than life who can lead an organization to be successful while they're there, but after they're gone, the organization tends not to be as successful as it was while they were there. If we look at Steve Jobs, and we look at his history at Apple. When he was at Apple, and he founded Apple. He was one of the founders of Apple, and while he was there Apple was a great organization. It was growing; it was very tight. He left Apple. What happened to Apple is that it sort of began to deteriorate and go down hill. He came back to Apple, and Apple started to be terrific and fantastic again. Now, Apple is successful, but when Steve Jobs leaves, who's going to make Apple great again? Its not clear that there will be another person, another Steve Jobs to make Apple great. The really great leaders, if you look at it from the long term, are those leaders that build organizations that are great long after they're gone, and they don't have to be highly charismatic. They have to just be able to focus on building a great organization rather than being the great leader.
FJ: In your coauthored book most recently titled Success Built to Last: Creating a Life that Matters, you and your colleagues interviewed with around 300 highly successful celebrities for research. Based on your observations, what is the success pattern of those highly successful people, and if it is from source to action, stimulated by passion, how do they do it in their individual life?
JP: To answer the last question first, we hope that people are able to duplicate the type of success that we were describing in the book, and that was the reason for writing the book was to try to give people an understanding of how a great life can be built. I think that the key driver in all of these people, and this is consistent with the findings on how you build a great organization, is that these individuals had a passion for something that they wanted to contribute. In organizations that passion was reflected in the purpose of the organization. Why did the organization exist? At the individual level the passion was displayed as something that these individuals wanted to contribute to, something that they wanted to dedicate their lives to doing, and with that passion, although they may have had more than one passion, they generally had one central passion. Pursuing that passion was what success was for them. They did not focus on maximizing the amount of money they were making or maximizing the power that they could have or maximizing their own fame. What they focused on was working on making their passion a reality. There's a similar process that we found in Built to Last that I mentioned earlier about how organizational leaders build great companies and they don't focus on maximizing shareholder wealth; they focus on building great companies. The individuals who are building great lives, focused on what they could contribute, rather than how much money they could make or how much fame or how much power they could get. That distinguished them from the typical view of a highly successful person. At least in this country, in the United States, where wealth, power, and fame are seen as the key determinants of success. These people were different. They have this passion. They thought about the world differently from the way many people think about the world, and the second ingredient is the way they took action, which was different from the way many people take action. So, those three arenas: having a passion that gave meaning to their lives, having thought-styles that allowed them to think about the world differently, and also having action styles that allowed them to convert their passions into actions. Those are the three things that they focused on that people can learn from and implement in their own lives.
FJ: For anyone aspiring to be successful, are there any similarities between managing his or her individual personal life and his or her business? If there are any, how do we make alignments?
JP: I think there are similarities and I pointed to one of them just a minute ago in terms of similarity about what you're trying to contribute. If you're just trying to make a lot of money, as an organization or as an individual, you don't tend to be as effective in creating something that is as really meaningful to the world for a very long period of time. There are similarities across individuals to organizations in that regard. Another similarity is making mistakes, and learning from mistakes. In the companies we studied in Built to Last, one of the most effective ways of promoting change was to keep trying a lot of things and to keep only what works. To try a lot of things, that means that there are a lot of failures, and those failures are not punished; they're opportunities for learning, and 3M is an extremely successful company at doing this. We found a similar pattern in individuals that they made mistakes, and they really looked at mistakes not as something to try to forget. One of the characteristics we saw that they tended not to repeat old mistakes across those two levels of analysis. That goes to both the individual and the organization in that regard.
In terms of action, the Built to Last companies pursued these very stretching audacious goals, and we found that at the individual level, they did the same thing. There were similarities across the two levels, thinking of either people or thinking of organizations. There wasn't a complete match, but there were some similarities.
FJ: I have two questions to go. How shall we design and optimize a high performance organization in today's highly dynamic lets say in journals?
JP: I think that the dynamics of how fast the environment is changing and how fast communication takes place, etc, means an organization needs to be much more responsive toward their environment and what that means is that their responsiveness needs to be not only at the top leader level but it needs to be throughout the organization. That means that there needs to be much more power-sharing, sharing decision-making, sharing ability to respond to opportunities and problems in the environment at all levels of the organization. Most hierarchal organizations put that responsibility over making major decisions about how to respond at the top of the organization or near the top. The decision is supposed to filter all the way down to the bottom. In today's world, that doesn't work because it doesn't move fast enough, number one, and number two, there's so much information that one person at the top or a small number of people at the top can't handle all that information.
I think that more and more decision-making needs to be at the lower levels of the organization, and there needs to be more responsibility and accountability and authority at lower levels in the organization. What this then will require, is that in order for people to be aligned around the same goals and the same orientations, the purpose and the values of the organization need to be shared very widely all up and down the organization because you won't have managers there making all these decisions. There will be non-managers who are interacting with a customer and need to make a decision very rapidly. How do they make it? They have to be guided by a commonly shared value system, a commonly shared purpose of what the organization's about, a commonly shared major goal that they're trying to achieve, and a commonly shared view in what the strategy's all about. If people all up and down the organization share those perspectives they're more likely to make those decisions.
FJ: Through your entire career, organization planning through many decades, and no organization wants to fail. They all aspire to achieve a certain level of success. What is your interpretation of success from an organization behavioral point of view?
JP: I think success from an organizational point of view is effectively contributing to the purpose that the organization has created for itself.
FJ: That'll be great. Professor Porras, thanks for your time, and I appreciate your cooperation.
JP: You're welcome.
FJ: Bye-bye.
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