Organizations and Change

This article was developed as a presentation to the 3rd Annual Building Saskatchewan Green Conference held in Saskatoon on 16-17 November 2006.

When Margret Asmuss, one of the conference organizers, asked me to speak, she said, "the audience will be interested in how to get the organizations in which they work to break out of their molds." To this end, I would like to offer you some ideas about how organizations work, as well as to suggest five things that you can do to make your organization more innovative.

Organizations are ubiquitous in our society and economy. Herbert Simon, the Nobel Prize winner in economics, has remarked that we live in an organization economy, where the bulk of our work and transactions occur within organizations.

Why are organizations important? Perhaps the key reason is organizations can combine ideas and viewpoints from a number of different sources better than can individuals and hence are better able to create knowledge.

The knowledge created by an organization often takes the form of rules, frames of reference, procedures, and norms. These ways of viewing problems typically encapsulate key insights into how an economy or society is functioning, and what the response should be of a particular organization. These frames, procedures, and norms are often constructed because they offer useful ways of understanding and dealing with problems.

The key thing about an organization is not the product that is created or the service that is provided, but rather the decisions behind what product or service is created/provided. The question of "What to do?" requires research: the process of exploration, of innovation, of experimentation; the ability to look at the world and figure out where things are going and what expertise the organization has at its disposal to be effective within this world. The outcome of this research is typically then codified into norms, rules, frames, culture, dominant logics, and so forth.

While these norms, rules, and frames are vital to the success of an organization, they can also get in the way of change. Norms, rules, and frames that were useful for understanding or dealing with one problem may no longer be useful when the problem changes or is replaced by another one. Organizations, like individuals, can get caught in ruts in their thinking.

Let me give you an example. On my way to work each day, I typically walk through Murray Park, which is home to a large number of spruce trees. In the summer, the path cuts diagonally across the park in a nice straight line through the trees.

After the first large snowfall this winter, however, the path that was first broken through the snow was not a straight line, but curved among the trees in large swooping arcs. Presumably, those first through, in the dark of the early morning, could not see the other side of the park, and wandered off the straight path.

For many weeks, this initial winding path remained the one that people used, even though it was obvious during the day that a much shorter path potentially existed. The reason for keeping on the original path was simple: it was well worn, while a new and ultimately a better path would require breaking new ground.

For similar reasons to why the original path was retained through the park, organizations can get caught in ruts. These ruts can lead to bad decision-making.

Here is an example from agriculture involving the Saskatchewan Wheat Pool (SWP) and its elevator construction initiative called Project Horizon. Under Project Horizon, the Pool built twenty-two large concrete terminals across Saskatchewan to replace a large network of wooden elevators. Pool executives believed that "if they built it, they would come"–that is, that members and customers would remain with the Pool as the new elevators were built and the old elevators were torn down. Pool executives also believed that if they could tie up all the contractors, they would be able to keep other competitors out of the market, a belief predicated on the view that the technology being used was the only one that existed.

What was the outcome of this initiative and strategy? First, other competitors were not kept out of the market. Instead, they found a new and cheaper technology (steel rather than concrete) and built new terminals in key locations. Second, not all members stayed with the SWP. Rather, many reasoned that if their grain had to be hauled a significant distance, they would be wise to look for the company that provided the best deal on grain handling. The result was that the financial fortunes of the Pool were severely strained and it came very close to declaring bankruptcy.

The SWP example illustrates what often happens to organizations that cannot change their dominant logic-they do not survive.

So, what can organizations do to survive? How can they avoid potentially fatal ruts? More importantly for the purposes of the task that I was assigned for this presentation, what can you do to help ensure that your organization is going on the right path?

Here are five things that you can do within your organization to keep it innovative.

1. Break new ground

• Avoid the lure of the easiest path. Challenge assumptions. Take a look at new evidence or interpret old evidence in new ways. Be open to new ideas.

2. Create some slack resources

• People cannot conduct research--they cannot pursue new ideas and frames--if they are always running flat out. In fact, running flat out is often a sign of an organization that is unwilling to
  be innovative.


• Find and encourage ways and time to be reflective of big picture matters.


• Take time during coffee or lunch breaks to think about something other than immediate problems or opportunities.


• Take an extra half hour in a meeting to discuss broader issues.

3. Encourage diversity

• Seek out wild and crazy ideas, or at least new perspectives.


• Look for ideas in seemingly unusual locations.


• Make a point of talking to someone in another part of the organization, or to someone who has different views than your own.


• Go to different conferences than the kind that you usually attend.

4. New structures may be necessary

• Explore changing the make-up of those things over which you have control, such as your coffee group.


• If you are in a position of authority, regularly think about establishing new structures or assigning new responsibilities.


• At times, it may be necessary to create a "skunk works", where a new group is given autonomy and a broad mission.

All the above suggestions share a common feature--they are all examples of what Hirschman calls voice and loyalty. Loyalty to an organization--the sense of being committed to the organization and working for its betterment--is critical in making voice--the raising of new ideas and strategies--effective. The danger, however, is that loyalty may also be the root cause of an organization becoming stuck in a rut. This leads us to a fifth thing that people should think about in order to foster change within an organization.

5. Exit the organization

• If the organization appears immune to efforts at change, leaving the organization is often necessary. Organizations that know their employees might leave are likely to be more open to new ideas.


• If you do leave, make sure to find a new organization that better fits your beliefs and viewpoints, at least in the sense of being open to diverse ideas, and is structured to avoid the previous organization's pitfalls.

Thank you.

In preparing this presentation, I drew upon ideas from the following sources:

Arthur, W.B. 1994. Increasing Returns and Path Dependence in the Economy. Ann Arbor: University of Michigan Press.

Hirschman, A.O. 1970. Exit, Voice, and Loyalty; Responses to Decline in Firms, Organizations, and States. Cambridge, Mass.: Harvard University Press

Lang, K. 2006. Cognition, Agency Theory and Organizational Failure: A Saskatchewan Wheat Pool Case Study. MSc thesis. Department of Agricultural Economics, University of Saskatchewan.

Loasby, B.J. 1976. Choice, Complexity and Ignorance. Cambridge: Cambridge University Press.

Simon, H. 2000. "2000 John Gaus Lectur-Public Administration in Today's World of Organizations and Markets." PS: Political Science and Politics, December: 749-756.

Simon, H.A. 1991. Organizations and Markets. Journal of Economic Perspectives. 5(2): 25-44

This blog entry was authored by Murray Fulton. To read additional Illative Blog entries or to leave comments on this entry, please visit www.illativeblog.ca. The Illative Blog is an initiative by the Knowledge Impact in Society (KIS) Project based out of the University of Saskatchewan. Email correspondence can be sent to kis.project@usask.ca