Holistic Improvement at Eastman Kodak:
Implementing a Completely Integrated Program
by Ralph H. Kilmann
Note: This 1990 article was published when the completely integrated program consisted of five tracks—not eight tracks. The last three tracks were not added until 1995. But the key principles and practices are still valid.
This article was originally published in Consultation, Volume 9, Number 1 (1990), pages 5-36. Special acknowledgment is given to Dr. William Lawton and the Eastman Kodak Company for permission to make this case available to the public.
Table of Contents
- Starting with the Culture Track
- Beginning the Skills Track and Continuing with the Culture Track
- Understanding and Managing Time
- Proceeding with the Team-Building Track
- Conducting the Strategy-Structure Track
- Conducting the Reward System Track
- Will a Change in Leadership Stop the Improvement Program?
- Returning to the Reward System Track
ABSTRACT
Revitalizing organizations for a competitive world cannot be accomplished with largely piecemeal and incremental efforts at change and improvement. Rather, a more holistic—transformational—approach is required in order to improve the interconnected aspects of organizational life: cultures, skills, teams, strategies, structures, and reward systems. This article first outlines three crucial ingredients of a completely integrated program for planned organizational change: (1) a holistic model that allows one to see all the controllable variables between the environment outside the organization and the characteristics inside the individual, (2) a sequence of five tracks that can adjust all the controllable variables that shape both the informal and formal aspects of the organization, and (3) a series of five stages for managing systemwide improvement in a carefully planned and orchestrated manner. Then the case of the Eastman Kodak Company is presented in order to illustrate the ingredients of a completely integrated program and to examine what it takes to implement holistic improvement amidst increasing pressures for bottom-line results in a competitive world. This case demonstrates how the program of planned change must constantly be adapted to the changing needs and circumstances of the organization. However, not unless the program addresses both the informal and the formal aspects of the organization—in sequence—will improvements be sustained for long-term success.
INTRODUCTION
A completely integrated program for improving organizations must specify at least three elements: (1) all the controllable variables—via a systems perspective—that determine organizational success, (2) all the multiple approaches—consisting of techniques, instruments, and procedures—that can alter these controllable variables, and (3) all the ongoing activities—from beginning to end—that manage organization-wide change (Kilmann, 1985). Organizational success is a matter of creating and maintaining high performance and satisfaction for both internal and external stakeholders over an extended period of time.
Regarding the first ingredient, a completely integrated program must be guided by a systematic, holistic view of the barriers (problems) and channels (opportunities) that must be addressed if organizational success is to be achieved. It is essential that such a global, penetrating perspective be used to pinpoint all these controllable variables—at the surface and below the surface—that can subsequently be used by managers and consultants as leverages for improving organizations.
Regarding the second ingredient, a completely integrated program must include multiple approaches for directly influencing the full range of leverage points that can change individual, group, and organizational behavior. As we will see, a variety of techniques, instruments, and procedures for achieving organizational success can be organized into a sequence of five tracks: (1) the culture track, (2) the management skills track, (3) the team-building track, (4) the strategy-structure track, and (5) the reward system track (Kilmann, 1989). The first three tracks improve the informal organization (how people behave toward one another on the job), while the last two tracks shape the formal organization (the documents, systems, technologies, and resources that guide members' behavior). As a whole, these five tracks can alter all the controllable variables between the environment outside the organization and the psyche inside the individual.
Regarding the third ingredient, a completely integrated program must specify how systemwide change can be managed in an organization—given the complexities and dynamics of a living system. While the process of change can be managed by an arbitrary number of stages, phases, or steps (from the very beginning of the program to the end), I have found it useful to organize the "how" of planned change into five critical stages: (1) initiating the program, (2) diagnosing the problems, (3) scheduling the tracks, (4) implementing the tracks, and (5) evaluating the results. (These five stages are similar to the numerous systems approaches that have been advocated for the field of organizational change and development: In particular, see Beckhard and Harris, 1977; Beer, 1980; Bennis, Benne, and Chin, 1976; French and Bell, 1978; Huse, 1980; and Tichy, 1983.) Only by viewing the organization holistically (the first ingredient) and surrounding the five tracks (the second ingredient) with the ongoing stages of planned change (the third ingredient) will continuous adaptability become ingrained in an organization—thereby creating and maintaining organizational success.
This article tells the story of the Eastman Kodak Company where a completely integrated program was implemented for the corporate function of market intelligence. The case illustrates how an energized corporate function, with matrix ties to the rest of the company, can serve as the central nervous system for quality decision making and action taking throughout a large, multinational corporation. But it is only through a holistic improvement effort that lasting success can be achieved. After some background information is presented, the case study is organized according to the five critical stages for managing planned change.
BACKGROUND
In 1880, Kodak's first product—Eastman Dry Plates—was introduced into the marketplace. In 1888, Kodak's first camera Number One Kodak—followed suit. Then, in 1900, Kodak created a mass market for photography with its soon-to-be-famous Brownie camera. For the next eighty years, Kodak dominated the market for cameras, film, and photographic paper by efficiently using a centralized, functionally designed organization that is perfectly suited to a predictable world. Then, circa 1980, the world changed: Dynamic complexity—fostered by worldwide accessibility, worldwide interconnectedness, and foreign competition—threatened both the viability of Kodak's long-standing structure and the appropriateness of its self-contained culture (Chakravarty and Simon, 1984). Electronic imaging, in particular, became a real alternative to silver halide photography. Then along came Fuji—a major Japanese player and fierce competitor in Kodak's key photographic markets.
On July 1, 1983, Colby H. Chandler succeeded Walter A. Fallon as chairman of the board and chief executive officer of Eastman Kodak. On November 16, 1984, Kodak told its employees about a new strategic focus accompanied by a new operational structure of subunits that would go into effect on January 1, 1985. In the words of Chairman Chandler and President Kay R. Whitmore: "We intend to be a world-class competitor in the markets we serve. We are driving to become the world's premier imaging and information systems company. We are confident our new organization will help us meet those goals, and that the energy and spirit of Kodak people will make this new organization work." ("Kodak Reorganizes..." 1984). The reorganization of the photographic division affected 80 percent of the company—the other 20 percent comprised the chemical division.
The new Photographic and Information Management Division—in sharp contrast to Kodak's old organization by function—is organized into three large business groups: Photographic Products Group, Commercial and Information Systems Group, and Diversified Technologies Group. Each business group consists of several lines of business (LOBs)—with profit and loss responsibility—that are related through shared technology, market emphasis, or strategic approach. The three business groups are supplemented by two new operational units: Worldwide Manufacturing and Support Operations, and Customer and Marketing Support Operations ("Photo Division..." 1984). Reporting to Customer and Marketing Support Operations is Market Intelligence (MI). This support function—consisting of some 125 information specialists—provides information services to the entire organization and serves as the clearinghouse for all database activity in the new division.
INITIATING THE PROGRAM
The crucial issue during "initiation" is whether the conditions exist for a successful improvement effort. Several key questions should be answered in the affirmative before the second stage—diagnosis—proceeds. The following questions pertain to the senior executives who are considering a major effort at organizational improvement. Through informal one-on-one dialogues, small group meetings, and formal sessions, the topic of planned change is digested.
Do senior executives understand the holistic approach, the five tracks, the critical stages of planned change, and what it takes to implement such a large-scale effort? It would be unrealistic to expect executives to make a well-informed decision about whether to implement a completely integrated program of planned change if they do not have the concepts and the language to debate the key issues. It is crucial for the program's ultimate success that the key executives know beforehand exactly what the program entails.
Will the senior executives fully commit to implementing the whole program of planned change? Once the executives know what to expect, the program's success requires their full commitment—in deed and not just in words. Sometimes, despite their commitment to follow through on the complete program, senior managers see the program as more relevant to the rest of the membership than to themselves. True commitment is evidenced when the senior executives openly acknowledge that they themselves are part of "the problem" and need to change as well. Such an admission sets the best example for the rest of the membership and encourages everyone to participate in a learning mode.
Will the implementation of the improvement program be led by senior executives and will they take full responsibility for its success? While most improvement efforts seem to be led by various staff groups—human resources, personnel, industrial relations, or employee relations—a completely integrated program for long-term organizational success should be led by line management, preferably by top management. With top management behind the change, the resources needed to conduct the whole program are more likely to be forthcoming. Moreover, with top management leading the charge, top priority will be assigned to the improvement effort in spite of all the pressures to concentrate on the here-and-now business problems and operational issues.
Are the senior executives willing to have consultants diagnose the organization's full range of barriers to success? While managers may believe they can conduct the diagnosis of problems themselves, this is the one area in which it is imperative to get an objective, independent reading of the organization's health. All the remaining stages of planned change rely on the diagnosis as the basis for choosing among various methods—techniques, instruments, and procedures—to bring about change and improvement. If the diagnosis is biased, inaccurate, or simplistic, the remaining stages of planned change will be jeopardized.
Generally, one or two key managers lead the search for a suitable internal or external consultant. These key managers often play a pivotal role during the remaining stages of planned change. They are usually the chief advocates of the program and those who feel a special responsibility for its success. Implementation, for example, is helped immensely if these key managers also happen to be the senior executives of the organization. Having the power of the hierarchy behind the improvement program—from beginning to end—helps ensure a successful outcome.
Return to the Kodak Story
In September 1984, just a few months before the reorganization of Kodak was announced to the public, I was contacted by Vince Barabba, the director of Market Intelligence. Barabba had made use of my theories and methods for organization design and development in the 1970s when he was director of the U.S. Bureau of the Census during the Nixon administration and again during the Carter administration. Following the completion of the 1980 census, Barabba joined Kodak for the explicit purpose of developing the new corporate function of market intelligence.
Although Barabba was well acquainted with the philosophy and requirements of my approach, other key managers were not. Consequently, he scheduled a half-day guest lecture for me at the end of September at Kodak's corporate headquarters in Rochester, New York. In this session, he asked me to present my holistic framework to several executives in marketing and a few directors in market intelligence. Since Kodak's way of talking about organizational success uses the language of organization-wide quality (whereas other companies use the language of productivity, innovation, performance, excellence, or competitiveness), I presented my approach in this context: how the organizational barriers to success can stand in the way of assessing consumer needs, designing products that satisfy these needs, manufacturing products that conform to the designers' exact specifications with minimal defects or rejects, and then selling and distributing the right products to the right customer in the right quantity at the right time.
In November 1984, just after Kodak's new strategy and structure were announced, I was invited back to corporate headquarters in order to make a similar presentation to MI directors and other executives who could not attend the September meeting. By mobilizing the support of the key people who understood the central role that MI would play in the new organization, Barabba was laying the foundation for initiating the program in MI.
During this meeting I learned that, as of January 1, 1985, MI would be organized into the same three areas as the three business groups of the company: MI for Photographic Products, MI for Commercial and Information Systems, and MI for Diversified Technologies. These three groups in MI would also be subdivided into smaller units to parallel the respective LOBs. Thus the organization of MI would mirror the organizations of Kodak. In particular, most members in MI would report both to an MI director and to a Kodak manager—for each LOB in each business group.
Shortly after this November meeting, the twelve directors in MI agreed that the diagnostic stage of planned change should be conducted in December and that the results should be presented in January 1985.
DIAGNOSING THE PROBLEMS
When the key executives and consultants believe that all the conditions for success are present—that the program has been initiated properly—the diagnostic stage of planned change can proceed. Now the objective is to develop a deep understanding of the full range of problems (barriers) facing the organization as well as its opportunities (channels) for success.
Many organizations make use of various employee-opinion surveys to learn what members think about their jobs, their division, and the functioning of the whole organization. While the information gathered from such questionnaires is certainly systematic, I do not believe that any survey can uncover the true experience of life in a complex organization. Only a one-on-one, face-to-face discussion can hope to capture the full range of issues that impact on organizational members. Even if it seems more efficient to interview groups of members instead of individuals one at a time, people will not voice their true feelings in front of other members unless the organization already has an open and trusting culture.
The consultants, with the aid of the managers, develop a plan to gather diagnostic information from members throughout the organization. The objective is to sample each level in the hierarchy—and each division and department—in order to get a representative view of the organization. Everyone in the senior management group should be interviewed, simply because their views, and especially their commitment to change, are so critical to the program. If there are as many as 5,000 members in an organization, interviewing about 250 members should provide enough information to diagnose the organization's problems and opportunities. For smaller organizations or units, 50 to 150 interviews should be sufficient.
Each one-on-one interview with a member begins with the consultant briefly reviewing the background and expectations of the meeting. He (or she) outlines the specific questions he will be asking and indicates what will be done with the information he collects. The consultant takes the time to explain what an improvement program is like and responds to any questions the interviewee may have. The consultant emphasizes that he cannot do his job if he does not find out what is really going on in the organization. The consultant then should express his awareness of the doubts the interviewee must be having about their meeting. For example, the consultant may suggest that it is quite natural for the interviewee to wonder if the consultant is working only for top management, to question whether the consultant can learn about the organization, to worry about how the information will be reported to top management, to feel that nothing of real significance will come from the program—as has been the case, perhaps, with other improvement efforts. Often, by explicitly voicing what the interviewee must be feeling and by sincerely responding to his concerns, the consultant gives the interviewee the confidence to reveal the organization's problems.
Return to the Kodak Story
The interview schedule for MI was developed in late November 1984 through numerous telephone conversations in which the criteria for selecting individuals were established and choices were made. It was decided to interview approximately 50 of the 125 members—all MI directors and numerous representatives from all the other levels and areas in MI. Moreover, it was decided to interview some twenty-five key external stakeholders of the new organization (such as the three business group vice-presidents and most of the newly appointed vice-presidents and general managers of the LOBs). Based on the availability of personnel during the first two weeks in December, a total of sixty-four interviews were scheduled (forty-six inside MI and eighteen outside MI). (See Levinson, 1972, for an excellent discussion on the theory and method of diagnosing organizations.)
To ensure that the interview process will examine the variety of controllable variables that determine organizational success, it is essential to be explicit about the model—the selective filter—that is used to ask questions and record responses. A holistic model is used for discovering the full range of barriers to success that can be transformed into channels for success. The model consists of five broad categories representing the at-the-surface aspects of an organization plus, at center stage, three aspects that operate below the surface of experience. The five broad categories are the setting, the organization, the manager, the group, and the results. The three holographic aspects are culture, assumptions, and psyches.
I conducted thirty-six one-hour interviews and my associate, Teresa Joyce Covin, conducted twenty-eight. Each of us spoke to a cross section of people although my interview schedule included more of the external stakeholders while Covin's sample included more of the internal ones. Then we met to discuss our similarities and differences in diagnostic findings so that we could synthesize what we had learned into one holistic view of MI's channels and barriers to success—organized according to the holistic model.
In January 1985, I presented the diagnostic results first to Barabba and later to the other directors in MI. I began by noting the channels to success (those positive qualities of the organization that would be the foundation for learning and change throughout the entire improvement effort): MI members expressed a strong loyalty to the company and felt a basic conviction that the company will succeed in whatever it does. MI members felt that they worked in a challenging environment and, perhaps because MI was still so new, they were quite optimistic about the possibilities for change and improvement. Moreover, MI members believed that their unit had strong top-management support. Unanimously, MI members acknowledged the critical role Barabba was playing in the success of the market intelligence function through his charismatic leadership.
The rest of my formal presentation concentrated on the various barriers to organizational success that had been identified during the diagnostic interviews. Since Kodak's new organization had been officially in place only since January 1, 1985 (and would not be fully operational until some time later), the interviews revealed numerous uncertainties concerning the impact that such a fundamental change would have on MI—both short term and long term. Consequently, many of the barriers to success were anticipated (listed as questions) rather than actual (listed as statements).
Regarding the setting, I highlighted two critical questions that were asked by virtually everyone we interviewed: Does MI really understand the needs of the customer? Does MI really understand the needs to its LOB clients? The implicit answer to these questions suggested that MI must improve (1) its understanding of the worldwide marketplace and (2) the quality of information it provides to LOB decision makers. Otherwise, MI's impact on Kodak's decision making would be limited.
Regarding the strategic barriers to success, the diagnostic interviews posed questions that revealed significant uncertainties surrounding the reorganization and what it meant for MI: Does MI have a clear understanding of its own strategic mission in helping the LOBs achieve their business objectives? Regarding a specific market research question, for example, should MI provide only the data analysis, make a specific recommendation, or make the decision itself? Will MI's strategy be translated into a well-documented set of plans and priorities that will guide all major decision making in MI—such as the allocation of resources to long-term studies or whether to accept contracts for certain short-term projects? Should MI's strategy be expanded to encompass business intelligence or business research? Essentially, it seemed that MI's strategic mission was not well understood by most members below the director level.
Regarding the structural barriers to success, the diagnostic interviews revealed additional uncertainties: How will the levels in the MI hierarchy affect the speed and quality of decision making and action taking? Will all the essential communication links across the areas and levels in MI be defined, documented, and used effectively? Presently, it appeared that MI members did not have the work procedures and job descriptions they needed to guide their daily efforts and make the best use of their time and talent. Furthermore, members wondered whether MI could outlive its current leader: It seemed that Barabba himself was the driving force behind MI's credibility at Kodak rather than the function—or the structure—itself.
Regarding the reward system barriers to success, the diagnostic interviews revealed that people in Kodak are paid for being a member of the organization, not for their contributions to performance objectives. It seemed that people who delivered consistently outstanding performance did not receive significantly more rewards than those who did not. Perhaps this non-performance-based reward system had not interfered with Kodak's success in the past, but the people we interviewed certainly realized that a performance-based system was mandatory for achieving success in a competitive world.
Regarding the management skills barriers to success, the diagnostic interviews revealed a number of questions to be addressed during an improvement effort: Do members have the people management skills to encourage disagreement and debate and to manage their differences in a productive way? Do members have the skills to tackle complex problems and hidden assumptions when they define and address the changing information needs of their LOB clients? It seemed that most MI members, who had received their formal training in specialized technical areas, could benefit from additional skill development in people management and problem management. I sensed, for example, that skills had to be developed in these areas: communicating nondefensively, fostering candor, managing conflict, motivating others, planning work, setting priorities, and conducting meetings.
Regarding the cultural barriers to success, the diagnostic interviews revealed that Kodak's self-contained, technical orientation from the past must be transformed into a market-driven, business orientation for the future. Would MI members continue to see the world with American blinders, or would the culture enable members to see a worldwide marketplace and act accordingly? Would the culture encourage the open expression of conflict and disagreements, or would it continue to reinforce politeness? Furthermore, since the function of market intelligence had increased in size and scope so quickly in just a few years, many members did not know one another. In fact, MI's culture seemed to foster impersonal social relationships on the job, which hampered trust, cooperation, good spirit, and a sense of community. Another side-effect of this social distance between members was that MI's culture seemed to encourage the withholding of information among its subunits. Moreover, MI appeared to have two classes of citizens—Salary I personnel (clerical and technical) and Salary II personnel (managers and professional analysts)—which further restricted cooperative effort and information sharing. Lastly, there was tremendous cultural pressure on everyone to be busy at all times—without considering whether all the hard work was contributing to performance according to a clearly understood strategic mission.
Regarding group barriers to decision making and action taking, several questions were raised during the diagnostic interviews that derived from all the preceding barriers to success: When should decisions be made by individuals and when should decisions be made by groups? Would the meetings include those who have the relevant information and expertise for the complex problems being addressed? Would meetings include those whose commitment is essential for implementing whatever decisions are made? It seemed that many meetings in MI did not motivate members to participate. The process for group decision making was described as unplanned, inefficient, wandering, and tough to manage without clear objectives and priorities.
After the directors had discussed all these diagnostic results, they realized—even more than before—just how critical the market intelligence function would be to the success of the new organization. While the directors were pleased that the interviews had affirmed the many channels to success that had made MI an attractive organization, numerous interconnected barriers to success were working against them in every category in the Barriers to Success model—both actual and anticipated. Consequently, Barabba and the directors decided to begin the improvement program as soon as possible. Although a few directors suggested delaying the program until the new LOBs had time to form, most of the directors thought that MI should be proactive in shaping its future.
SCHEDULING THE TRACKS
The next stage of planned change—scheduling the tracks—involves selecting the methods (techniques, instruments, and procedures for bringing about change) that will make up each of the five tracks into a timed sequence of activity. Once a plan for action has been formalized, managers, members, and consultants will work together to apply it in the next stage: implementing the tracks.
The five tracks, in all cases, are scheduled in the prescribed order. The first three tracks (culture, skills, and team-building) address the people side of the organization, what is often called the informal organization—the blood and guts of how people behave toward one another on the job. The last two tracks (strategy-structure and reward system) address the formal side of the organization—the systems, resources, technologies, and documents that guide what people in the organization are supposed to do.
What does each track do for the organization? The culture track enhances trust, communication, information sharing, and willingness to change among members—the conditions that must exist before any other improvement effort can succeed. The skills track provides all personnel with new ways of coping with complex problems and hidden assumptions. The team-building track infuses the new culture and updated skills into each work unit—thereby instilling cooperation organization-wide so that complex problems can be addressed with all the expertise and information available. The strategy-structure track develops either a completely new or a revised strategic plan for the firm and then aligns divisions, departments, work groups, jobs, and all resources with the new strategic direction. The reward system track establishes a performance-based reward system that sustains all improvements by officially sanctioning the new culture, the use of updated skills, and cooperative team efforts within and between all work groups. (The reader is referred to Kilmann, 1989, for a detailed description of the theories and methods behind each track.)
While all five tracks are always relevant to planned change in today's dynamically complex world, what makes each application of the program different are the various methods used in each of the five tracks. Just as the diagnosis varies for each organization, so does the choice of method to address each problem. In some cases the skills track will include material on leadership styles, conflict-handling modes, and ways of minimizing defensive communication. If the members have already acquired these skills, training moves directly to teaching methods for addressing complex problems. Clearly, managers and consultants should be aware of the diversity of methods that exist so they can choose the ones that best fit the problems revealed during the diagnosis of the organization (Beer, 1980; Huse, 1980; Tichy, 1983).
Return to the Kodak Story
During mid-January 1985, I was asked to prepare a detailed outline of how the five tracks would be scheduled to remove all the barriers to success identified through the diagnostic interviews.
All 125 members in MI were scheduled to participate in the first three tracks, but the natural work groups would be separated into Salary I and Salary II subgroups for the culture track and the skills track. The diagnostic interviews, as mentioned earlier, had revealed that there were two classes of citizens in MI. Indeed, Salary II persons (analytical and management types) were reluctant to acknowledge the talents and capabilities of Salary I persons (clerical and technical types). As a result, Salary I persons were less assertive in front of the more educated and higher-ranking members in the Salary II classification. After these status barriers to success were removed during the first two tracks (in a safe learning environment), the subgroups would be reunited in the team-building track (to apply what was learned in MI's natural work groups).
The cultural track was scheduled for three workshops: one full day in February, March, and April 1985. (Each workshop would be conducted in three sessions of some 40 persons each in order to accommodate all 125 members of MI in an effective classroom arrangement; this format was continued for most of the first three tracks of the program.) The first culture workshop would enable each subgroup in MI to identify its culture-gaps (the difference between actual and desired norms) and develop a sanctioning system (an informal reward system) that would enforce the switch from outdated to desired behavior. The second workshop would assess the progress to date on developing a new culture and would enable each subgroup to revise, if necessary, its desired norms and its sanctioning system. The third workshop would involve another assessment of progress to date and provide additional steps to close any remaining culture-gaps.
The skills track (so named since all 125 members of MI would participate, not just managers) was scheduled for three workshops: one full day in February, March, and April 1985. The first skills workshop would concentrate on improving people management and problem management skills, the second workshop would enable the participants to gain further experience with their new skills on a simulated MI project, and the third workshop would focus on additional ways in which to augment skills for addressing complex business problems. Again, in order to foster a safe learning environment, Salary I and II personnel would meet separately for group exercises and discussions during the workshops.
During the first three months of the schedule, the first half of each month included a formal session in the culture track and the second half of the same month included a formal session in the skills track. This "dual tracking" seemed appropriate since the diagnostic interviews had revealed that MI members were quite open to learning, change, and improvement.
The team-building track was scheduled to reunite all Salary I and II personnel in their natural work groups for the first time during the improvement program. One all-day workshop was scheduled for May 1985, and subsequent monthly sessions would be scheduled as on-site meetings if necessary. The first team-building workshop would enable the members in each work group to synthesize the different cultural norms and sanctioning systems that had been developed in Salary I and Salary II subgroups during the prior tracks. Then members would make use of various team-building assessments to pinpoint and eliminate any barriers to effective group functioning. The next sessions would assess the progress being made in applying the new cultural norms and the new skills in all group discussions in the work place; then action steps would be developed to overcome any remaining obstacles. If, after the third session, any intergroup problems had not been resolved in the process, interteam-building workshops would be scheduled for the relevant groups.
The strategy-structure track was scheduled to begin with a one-day workshop in May 1985, after forming a special task force of approximately fifteen members representing all levels and areas in MI. Since Kodak had just reorganized around a new strategy, the participants in this track would not be starting from scratch. Nevertheless, the diagnostic interviews had revealed considerable disagreement on the philosophy of market intelligence and how this philosophy should be translated into a mission statement, specific objectives, policies, and procedures throughout MI. The participants in this track were scheduled to meet once a month with the consultants and many more times on their own so that they could present their recommendations for strategy-structure improvements to Barabba and the MI directors by fall 1985.
The reward system track also was scheduled to begin with a one-day workshop in May 1985, since the basic parameters of MI's strategy and structure were known and only a fine tuning of these documents was required. The consultants would meet once a month with approximately fifteen participants representing all the levels and areas in MI—a different task force from the one that was organized for the strategy-structure track. Between these scheduled meetings, participants in the reward system track would meet on their own to address any reward system problems—revealed through the diagnostic results and subsequent experience. The participants would present their recommendations for reward system changes to Barabba and the MI directors by January 1986.
IMPLEMENTING THE TRACKS
Responsibility for the complete program's success was neither delegated to the consultants nor assigned to any staff group. Instead, the shadow track—a special steering committee composed of Barabba and the three directors of the business groups, plus an additional director who would coordinate the logistics of the program—was formed to manage the whole implementation process. The shadow track would run parallel to all five tracks. This group would monitor the program's progress and do whatever was necessary to ensure its success. Formal meetings, at least once per month, would be held by this group and would be attended periodically by the consultants.
Typically, the members of the shadow track are expected to keep in regular contact with the units they are representing throughout the organization. It might also be important to provide a credible information system during the early stages of the program (an anonymous e-mail system, for example), so that negative attitudes, feelings, and any difficulties with the improvement program can surface. In this way, the shadow track (with the professional judgment of the consultants) has a basis for adjusting the program to address the evolving needs, concerns, and problems of the organization. Alternatively, when positive experiences occur that signify the desired direction of organizational change, it is especially important to share such critical incidents with the rest of the organization. While accounts of what other organizations have experienced with a completely integrated program may inspire some members to try new ways of doing things, no learning model is ever as powerful as discovering how a work group in the very same organization has actively applied the principles and practices of the program. Sometimes, the shadow track develops its own newsletter (or makes use of an existing publication) to publicize improvements and serve as a general forum for question-and-answer dialogue. Essentially, the consultants and the members of the shadow track meet regularly to consider all the many ways in which member needs can be addressed and positive changes can be celebrated.
Starting with the Culture Track
The first track began, as scheduled, in February 1985. In the first part of the workshop, I presented an overview of the Barriers to Success model, a summary of the diagnostic results from all the interviews (only the directors had seen the report previously), and an outline of the five-track program that was scheduled for MI. Following a lecture on culture, the participants individually responded to two forms of the Kilmann-Saxton Culture-Gap Survey (Kilmann and Saxton, 1983): (1) actual and desired norms within the MI community; (2) actual and desired norms between MI and the client organizations (the LOBs in the three business groups). These two perspectives reflected the matrix organization for MI members who were working simultaneously for an MI director and a Kodak manager—as noted previously. (See Allen and Kraft, 1982, for a similar approach to identifying and managing cultural norms.)
Once the participants scored their culture-gaps for inside MI and outside MI, they calculated the average culture-gaps for their subgroup (separated by Salary I and II personnel). Using these results as background information, the participants then listed actual and desired norms within their subgroup and toward others (the rest of MI and their LOB clients). Next each subgroup developed its own sanctioning system: What would happen when a victory occurred at the work place (enactment of a desired norm, such as, "arrive at meetings on time") versus what would happen when a violation occurred (enactment of an outdated norm, such as, "arrive at meetings whenever you feel like it")? The first workshop in the culture track concluded that participants should meet on their own during the next month in order to finalize their plans for cultural change.
Beginning the Skills Track and Continuing with the Culture Track
Later in February, as scheduled, the second track began with an all-day workshop on people management and problem management skills. An interpersonal ice-breaking exercise was the first activity of the day. The diagnostic interviews, remember, had revealed that MI members did not know one another very well and thought their interpersonal relationships were too aloof. To eliminate this barrier to open communication and information sharing, each participant was asked to write on easel-pad paper his responses to these items: name, education, hometown, hobbies and outside interests, goals and aspirations, greatest accomplishment, greatest disappointment, and an idol or hero. Each person was then given two pieces of masking tape so that his completed paper could be taped to his shoulders. Next the participants spent an hour walking around the room and getting to know one another through this initially awkward, but eventually enriching, experience. After this exercise, everyone removed his paper and hung the unusual artifact on the wall of the classroom.
Following the ice-breaking exercise, several hours were devoted to developing skills for managing people and groups. Several topics were covered: blind areas of one's personality and behavior, ego strength and self-worth, principles for giving and receiving effective feedback, how to communicate in nondefensive ways, different models of motivation, different modes of managing conflict, different styles of leadership, and principles of effective group process. Numerous concepts were discussed, several personality instruments were administered, and a few group exercises were conducted so that participants could use these theories and methods on the job. Then, using a business case, the five steps of problem management were illustrated (sensing problems, defining problems, deriving solutions, implementing solutions, and evaluating outcomes) along with the various steps for challenging key assumptions (Mason and Mitroff, 1981).
In the months to come, participants in the program would frequently refer to this first skills workshop as an "action-packed day." Not only did they recall the strange ice-breaking event, but on numerous occasions they even cited the business case and other learning exercises. Whenever a meeting wandered off course, for example, members would make reference to a particular group exercise by declaring: "We're lost on the moon again!" (Hall, 1971). Thus a new common language and a shared conceptual understanding gradually spread throughout the MI organization. As cultural norms and behavioral concepts became part of MI's everyday vocabulary, members began perceiving, thinking, and behaving differently on the job.
In early March, the second workshop in the cultural track took place. The steps of problem management were used to convey why culture-gaps do not close just from talking about them and how the sanctioning systems can be used to break old cultural habits and reinforce adaptive behavior. The third workshop in the culture track, conducted in early April, continued with this problem management approach to closing culture-gaps.
In late March, the second workshop in the skills track took place. This session gave participants another opportunity to practice their skills for problem management by working on a realistic simulation of a client requesting a study from MI. (This hypothetical project was developed by the shadow track especially for this workshop.) One of the group MI directors, Marv McNeice, introduced the project to the participants and then played the role of client throughout the day. While the group members did an excellent job of applying many of the principles they had learned in the previous skills workshop, a key experience occurred: Once the scope of the project was outlined, very few groups asked McNeice to meet with them and explain his needs and objectives more thoroughly. In fact, it was surprising to see McNeice walking from group to group without being approached for further clarification or being asked for more information—both of which he was prepared to provide upon request. In some groups, the members even asked McNeice to leave the room so they could concentrate on the project without his interference!
At the end of the simulation, McNeice asked why so few groups had taken advantage of his—the client's—presence. At first the groups were defensive as they realized they had resorted to the self-contained posture that had dominated Kodak for decades; then, with further discussion, they agreed that a powerful lesson had been learned: MI must interact with its LOB clients continually so that its market research studies would satisfy client needs—an important criterion for successful problem management in a service organization.
Understanding and Managing Time
By early April, a recurring complaint began to gain momentum in MI: Because of all the pressure from the new LOBs to obtain vital market information, many MI members felt they no longer had the time to attend the workshops. It seemed that the LOBs were in a crisis mode and were expecting market intelligence to provide all the answers to their overwhelming number of business questions. During a meeting of the shadow track, I reminded the directors that the diagnostic interviews had revealed that members felt a strong cultural pressure to be busy at all times and work long hours until exhaustion. Although members said this style of work was basic to Kodak (and consistent with the Protestant work ethic), I was beginning to wonder whether the recent surge in complaints stemmed from deficient skills in managing time—rather than from an increase in the workload per se. And perhaps this skill deficiency was coming to the forefront now because the new competitive world was being confronted for the first time.
Some directors in the shadow track argued that the best way to solve the time problem was to cancel the improvement program: The extra time saved would help MI conduct the vast number of market research studies being requested by the new LOBs. Barabba listened intently and then insisted that it was not acceptable to terminate the improvement effort—especially not now, when MI seemed to need it the most. Besides, he argued, the full benefits of the program would not be realized unless the fourth and fifth tracks were implemented.
After more discussion, a compromise solution was proposed by the directors who were most concerned about alleviating the immediate work pressures: All the remaining sessions in the program, which had been scheduled from 8:30 A.M. to 4:00 P.M., would be rescheduled from 8:00 A.M. to 2:00 P.M. with a forty-five-minute working lunch. In this way, several directors thought the participants could return to their offices in the afternoon for several more hours of work. I agreed that the new schedule would provide sufficient—but not ideal—time to keep the program on course. But I proposed that the third workshop in the individual skills track (April 1985) should concentrate exclusively on the principles and practice of time management (Mackenzie, 1972). Such a switch in content seemed justified given the LOB pressures on MI. The shadow track agreed that the improvement program should proceed with these adjustments in both schedule and content.
In late April, the special six-hour workshop on time management struck a chord with most of the members in MI and proved to one of their most valuable sessions. Following a lecture on time management, each participant in the workshop was asked to develop four lists: (1) the tasks she should be spending more time on, (2) the tasks she should be spending less time on, (3) the time-wasters causing these time-gaps that she could directly control, and (4) the time-wasters that she could not directly control in her immediate work place. After discussing these lists in their subgroups, the participants came to a startling conclusion: They waste most of their time. The participants realized that wasting time occurs in several ways: (1) working without a clear sense of priorities or without sufficient planning, (2) not working on the most important projects first and the least important projects last, (3) jumping from one task or project to another before bringing anything to completion, (4) allowing unannounced visits and telephone calls to interrupt concentration throughout the day, (5) not being able to say no to requests that are peripheral and really pertain to someone else's job, and (6) not having an agenda before all group meetings and not sticking to that agenda during all group discussions.
Since this workshop on time management occurred after several months of dual tracking with the culture and skills workshops, the members in MI were able to apply their new knowledge quite readily back on the job. Not only was the culture already changing to support new ways of doing things, but the skills for communicating intentions more assertively were being evidenced both within and between work groups. Thus it was much easier now for members to say no—courteously, of course—and to insist that job priorities either had to be respected outright or had to be renegotiated.
Proceeding with the Team-Building Track
The third track began, as scheduled, in May 1985. The process of reuniting the Salary I and II subgroups into their natural MI work groups for the first time during the improvement program went smoothly. In the previous month, many members commented that the first-class/second-class distinction between Salary I and Salary II personnel was fading. Managers and professionals (Salary II) developed—and enforced—these desired norms: Everyone in Kodak deserves equal respect; everyone should be viewed as a resource for defining and solving complex problems; don't support class distinctions in the work place. Clerical and technical personnel (Salary I) developed and enforced—these desired norms: Assert yourself in a supportive and confident way; professional respect comes from professional behavior; keep up to date on MI projects so that you understand the context of your own contributions; participate in educational and training opportunities that will improve your value to the organization. Thus the first topic in the team-building track—synthesizing cultural norms and sanctioning systems in Salary I and Salary II subgroups—was rather easy since MI already had overcome its status barriers to organizational success.
The next step in the team-building track was to assess team-gaps. On seven-point scales (1 = not at all; 7 = extremely so), indicating an 0 for actual and an X for desired, each member responded to items like these: To what extent do you feel a real part of your team? To what extent do you understand your team's goals? How well does your team manage its time by establishing priorities and procedures for choosing among competing projects and activities? How effective is your team at involving outside people when you need additional resources or expertise? How effective is your team at monitoring and adapting to your clients' needs for market information? Each work group then calculated its average team-gaps—the differences between actual and desired scores on fifteen dimensions of work-group behavior (Dyer, 1977).
In the remainder of the first team-building session, each natural work group focused its efforts on defining the problems underlying its five largest team-gaps, deriving solutions to these problems, and planning for the implementation of solutions back at the work place. Much of the discussion in these work groups touched on earlier conversations on cultural norms and individual skills. Now, however, the emphasis was not on learning new material but on applying both the new culture and the new skills day after day. Thus the team-building track concerned why all the new material was not being applied and what could be done about it.
Following the first team-building workshop, each work group was asked to appoint a process observer (PO) before the start of every meeting at the work place. This person would monitor how well the new culture and the new skills guided the group's discussions. At the end of each meeting, the process observer would summarize what the group did particularly well and in what ways the group fell short. Moreover, a different member would be appointed to this role every time the group met—whether it be the boss or a subordinate.
During the next few months, I was invited to attend regular business meetings to observe the process myself and give members my critique. I could see that most of the work groups were applying the basic material they had learned during the first two tracks. In virtually all cases, it was no longer necessary for each group to appoint a formal process observer—the responsibility for assessing and improving the group's functioning had become shared among all group members.
Conducting the Strategy-Structure Track
The fourth track began in July 1985, two months later than scheduled. The increase in market research studies requested by the LOB managers had created a demanding workload for all MI members. Now it was even more important to manage time with an effective group. Despite all this busyness, though, sixteen members representing all the areas and levels in MI met with the consultants for one full day in order to begin the process of defining and solving MI's strategy-structure problems.
In their special task force, participants in the strategy-structure track went back to the basics: What is strategy and what is structure? (Galbraith, 1973). What do these documents provide for organizational members? Why are these documents needed in different forms to help different people working on different tasks with different objectives in mind? What is MI's current strategy-structure arrangement? Where is MI headed in the next five years? How can MI's strategy and structure be fine-tuned for the future?
The sixteen participants thus were exposed to most of the basic concepts of organizational strategy and structure. Then the strategy-structure problems that were identified during the diagnostic interviews were reviewed. Next Barabba presented MI's five-year vision along with an explicit statement of what is open or closed territory for discussion. Participants could not question the reorganization of Kodak into lines of business—this was out of their hands. Nor could they question Kodak's strategic mission of becoming the world's premier imaging and information systems company. But apart from these constraints there was a lot of room for strategy-structure improvements in MI particularly with regard to the documentation each member would have at his or her disposal. Participants were also free to recommend just how MI's own strategic mission should be stated and what structural improvements could add efficiency and effectiveness to its operations.
Following the various presentations on all the introductory material, the remainder of the first workshop focused on the critical issues—problems and opportunities—associated with strategy and structure. A community discussion among all the participants revealed three basic themes: macrodesign, microdesign, and links and flows. The sixteen participants then formed three subgroups to work on these sets of problems. A coordinating group was established with a representative from each of the three subgroups. Its purpose was to coordinate the work among the three groups, to communicate with the rest of MI about the progress of the strategy-structure track, and to present the final recommendations to the shadow track.
The subgroup on macrodesign would reformulate a concise statement of MI's mission with recommendations about MI's formal structure and the mission of each of its subunits. The subgroup on microdesign would develop a system of procedures to ensure that personnel know their fundamental purpose in the organization and the means at their disposal for being successful. The subgroup on links and flows would prepare a list of critical communication, information management, and external relations needs within MI worldwide and would then recommend a process for satisfying these needs.
During the summer of 1985, the participants met frequently in their three subgroups to define and solve their set of strategy-structure problems. On most issues, they sought the advice of other members in MI who were not involved in this track. When more systematic information was desired, they relied on their expert knowledge of conducting market research studies in order to survey the opinions of all MI members with structured questionnaires.
In November 1985, the coordinating group presented its recommendations for strategy-structure changes to the shadow track. The following items highlight the key recommendations: MI should provide not only information but also the necessary resources, tools, and expertise so that Kodak decision makers can make effective use of that information; in order to fulfill its mission, MI must state the implications of the information it gathers for LOB decision makers; MI's clients should be helped to define their information needs; and since these needs go beyond market information, market intelligence is really business intelligence—and the function should be renamed accordingly.
Other recommendations were offered by the participants in the strategy-structure track. Each new person, upon joining MI, should receive an employee orientation package and a copy of MI's standard operating procedures. Whenever possible, a mentor should be assigned to help the new person with on-the-job training and general coaching. Management should be more proactive in its support of employee participation in training programs. Project assignments should be made to broaden the employee's skills and knowledge across product/market areas rather than to develop experts in very limited jobs.
In the following months, the shadow track met to review all these and other such recommendations and prepare a response to the MI community: Which items would be implemented as stated? Which items would be modified before being implemented? Which recommendations would not be implemented in any form? In each case, the reasons behind the decision would be stated explicitly. Within one year, the great majority of recommendations were implemented—often without modification—since understanding and acceptance had been built into the process of developing solutions to strategy-structure barriers to success.
Conducting the Reward System Track
The fifth track, scheduled to begin in May, was postponed for several months. Similar to the case of the strategy-structure track, the delay was due in part to the vast number of market research studies being requested by the new LOBs. But in the case of the reward system track, there was another cause for delay: Some members in the shadow track—the Group MI directors—did not want to relinquish their prerogative to manage the reward system. What began as a reasonable concern about choosing the right members for the task force became an exercise in choosing the perfect set of people to represent MI's full range of interests. After several months of debating why one person would be a better representative than another, I finally lost patience: "So what if the composition of the task force is not perfect? Let's get on with the process and expand the membership later if we discover any serious deficiencies!" To this statement, one Group MI director responded: "If I'm not involved in this process and other people several levels below me are, my subordinates will know more about the intricate technical details of the reward system than I do. That's not right."
At this point I reminded the directors in the shadow track that the participants in the reward system track would be making recommendations, not decisions, and there would be ample opportunity for everyone to learn the details of the system. In fact, the whole decision process would help everyone understand the reward system much better than before. Eventually, the members of the shadow track surrendered to reality: The diagnostic results had revealed numerous barriers stemming from the design and administration of the current reward system that only a participative process could hope to remove.
Before proceeding with the fifth track, there was another critical issue to resolve: What could be changed and what was fixed with regard to Kodak's formal reward system? In July 1985, a memo from Chairman Colby Chandler informed all senior executives that, by January 1986, a Special Recognition Plan was to be designed and implemented by each organizational unit. In August 1985, MI was informed that Kodak was revamping its formal reward system and all units should postpone making suggestions on improving the system until the new one was developed. Consequently, the shadow track agreed that participants in the reward system track should concentrate on developing the Special Recognition Plan (SRP) for application to the unique circumstances in MI—which is exactly what Colby Chandler was asking each organization in Kodak to do. This focus certainly restricted the scope of the improvement program, especially since numerous barriers to success pertained to the company-wide reward system. But the shadow track agreed that, once the new system was announced, the reward system track would be reinstated to examine how MI could modify and adapt the new system to its specific needs.
Will a Change in Leadership Stop the Improvement Program?
In September, just one month before the reward system track was to begin, Barabba informed me that he would be leaving Eastman Kodak to join General Motors as executive director of its equivalent of market intelligence. I was concerned. How would this change in leadership affect the improvement program? (See Tichy and Ulrich, 1984, for an insightful discussion on the key role of the transformational leader in spearheading planned change.) After all, Barabba had played a major role in initiating the program and moving it along. He assured me, however, that he fully expected the program to continue. Top management and the MI directors would not allow the program's many benefits to be undermined, regardless of the previous debates about when and how the various tracks of the program should be implemented. While I was not entirely convinced by his arguments, I did have to admit that, thus far, he had predicted correctly the outcome of all the other critical events.
In early October, Kodak announced that Bill Lawton, the director of International MI, would replace Barabba as director of the company's entire market intelligence function. Lawton telephoned me to discuss his new job and assure me that the program would continue as planned, without interruption. He affirmed his support of the improvement effort and said he intended to take full advantage of what the program was providing for MI as well as for Kodak.
On the following day, I had another opportunity to discuss MI's change in leadership with Barabba. And I began to see that Lawton's appointment as head of MI had a lot to do with the fact that his management style so consistently reflected the principles and practices of the program. In all likelihood, selecting Lawton to head MI had sent a message to every member that not only would the program be completed but MI had achieved sufficient credibility in its own right to survive its first leader. In the members' eyes, Kodak's top management had made the right leadership decision for MI's future.
Returning to the Reward System Track
n mid-October, a group of fifteen participants—representing every level and area in MI—met in an all-day workshop to learn about the purpose and functioning of reward systems and special recognition plans (Lawler, 1981). They were exposed to the answers to these basic questions: What is motivation? What is performance? What is measurement? What is a reward? How does the organization motivate high performance—measured objectively—with its extrinsic and intrinsic rewards? Next they reviewed the reward system problems that were identified during the diagnostic interviews. Lawton then presented the guidelines of the Special Recognition Plan (SRP), as outlined by the top management, and explained why the participants had to delay an analysis of the total reward system.
Following the various presentations on all the introductory material, the remainder of this workshop focused on the critical issues—problems and opportunities—associated with developing and implementing an effective special recognition plan. A community discussion among all the participants revealed three basic themes: design, implementation, and review. The fifteen participants then formed three subgroups to work on these sets of problems. A coordinating group was formed with a representative from each of the three subgroups.
The subgroup on design would develop the reward criteria and procedures for the SRP; the subgroup on implementation would determine how to translate the plan into practice; the subgroup on review would determine how the SRP's design and implementation should be monitored and adjusted for different areas, levels, and situations in MI.
During the next few months, from October through December 1985, the participants met frequently in their three subgroups as they worked to address their set of reward system problems. In December, a preliminary plan was presented to most of the MI's members via focused group interviews. Based on their reactions, the SRP was revised by the participants in the reward system track and then presented to the shadow track in early January 1986. Without any further modification, the SRP was approved by the shadow track and was implemented later that same month.
EVALUATING THE RESULTS
Usually this fifth and last stage of the improvement program receives the least time and attention of all the stages of planned change. My own experience is that the program "concludes" for the consultants a few months after the formal team-building sessions have been conducted. When the consultants have initiated discussions on strategy-structure and the reward system, they generally spend most of their time sitting in the back of the room, simply observing how the members of the organization manage their own improvement process. In fact, by the third session of the reward system track, the consultants are seen less frequently on site and gradually disappear altogether. Even when the organization initially planned for a formal evaluation to be conducted when the five tracks are complete, the topic usually gets dropped. By the time the consultants fade away, most members, including senior management, are fairly well convinced of the outcomes without needing a formal assessment. The members experience the effectiveness of their decision making and action taking in all work units. They feel very good about themselves, their organization, and their approach to problems. They can see the improvements themselves.
What is the need, then, for a formal assessment beyond member perceptions and impressions? Formal assessments tend to confirm these informal evaluations and systematize the results for the whole organization. Perhaps the more vocal members are not a fair representation of the entire membership. It may be that the quieter members are more dissatisfied with the outcomes of the program than are their more vocal counterparts. Alternatively, it could be that the more vocal individuals are more negative about the change effort and the silent majority is very pleased. It is therefore important that a representative assessment be conducted to ensure a balanced evaluation.
Another reason for a systematic evaluation is to keep the idea and purpose of diagnosis alive and well in the organization. In fact, one could think of evaluation as a second problem diagnosis. If the organization has been successful in solving its problems, then conducting another round of interviews across all levels and departments should result in a very different assessment. If the program has been successful and all members have internalized their learnings (as well as realigned the formally documented systems), the interviews should reveal no new problems. Any problems raised during the second round of interviews would be qualified with: "But, of course, we are already working on that problem and expect to solve it."
Evaluators, however, have been known to emphasize "bottom-line" results: return on investment, earnings per share, profit, sales, number of clients served, market share, budget increases, number of patients and new products, new contracts and orders, productivity gains, and many other performance measures. From the point of view of any stakeholder—those who have a stake in the focal organization, such as consumers, stockholders, suppliers, federal agencies, and the community—one usually can suggest some "hard" outcome measures. Making a before-and-after comparison on any of these measures (before and after the improvement program), should provide a solid basis for assessing the impact of the intervention. If the program were successful, the differences in these measures should be evident—or so the argument goes.
While these hard, bottom-line measures certainly can be convincing, one has to recognize their limitations. Improvements in the quality of decisions and actions, for instance, do not translate to one-for-one increments in performance and morale. Normally, a whole series of decisions and actions is combined in complicated ways before their effects are noticed.
One should also not forget the time lag between decisions and actions on the one hand and performance on the other. Some of the bottom-line measures would not be affected until months or years after a key decision has been made. For instance, improved decision making that results in new approaches to product development will not be felt in the organization's setting for years. If the before-and-after comparisons are made right after the improvement program has concluded, one cannot expect outside stakeholders to take note of any observable differences in outcomes. Ironically, if such before-and-after comparisons were to suggest significant improvements (or declines), they probably would be spurious or artifactual. Only if the bottom-line measurements are made over a period in which true effects can be expected, can one take the results of such an evaluation seriously.
Return to the Kodak Story
In January 1986, my involvement with MI's improvement program ceased after the third formal session of the reward system track. From this point on, it was expected that the organization could implement its strategy-structure and reward system changes without outside help. Furthermore, if new problems or opportunities arose, MI had the culture, skills, and team spirit to mobilize a new task force on its own initiative.
Two years later, in February 1988, I called Bill Lawton to see if I would be allowed to make the Eastman Kodak story available to the public. He was very enthusiastic about the prospect and suggested I visit Kodak to discuss the results of the improvement program with the members themselves—in the spirit of a mini-diagnosis. In fact, he would schedule two focused group meetings with the members of Business Research (the new name for the old Market Intelligence). The first group would consist of members who had actually participated in the improvement program from beginning to end; the second group would consist of members who had entered Business Research during the past year, though they had worked for other units in the company. Lawton thought it would be interesting to see how the two groups viewed the results of the program. I agreed. If the improvement effort was successful, the second group should have internalized the principles and practices of the program through socialization and the pressures of the new culture (Weiss, 1972).
In March 1988, I spent a day with Business Research. In the morning I met with five members from different areas who had been through the completely integrated program—from late 1984 to early 1986. I learned several interesting things from this group. First, if I suggested today that an improvement program should separate Salary I from Salary II personnel, there would be an uproar. Apparently a strong bond of loyalty and respect had developed between these two former classes of citizenship. This first group offered several examples—with considerable pride—showing the fundamental and equal contribution that both secretaries and other members provide in the same organization. Or as one person put it: "We even have a career path outlined for secretaries, which probably doesn't exist in any other organization in Kodak."
Second, there seems to be a corporate-wide acceptance of Business Research, not just by top management. In the old days (three years ago), as one member suggested, the new heads of business units viewed MI as having people with analytical skills but not "street smarts." For the LOB managers, being asked to use market information to inform decisions before the fact—rather than to justify decisions after the fact—was quite at variance with traditional practice. Thus MI, as had been revealed through the diagnostic interviews with clients, was often seen as a nuisance and a place to send analytical marketing people who had not worked out in the real world of customers and sales. Now, however, the tide had turned. The term "street smarts" was no longer in vogue; in fact, the term now suggested an untrained mind. Above all, Business Research today was being viewed as an ideal job experience for the future business managers in the LOBs. Indeed, in the past three years 50 percent of the personnel from the old MI function had been lured away to work directly for the LOB managers. Why? Because of their analytical understanding of customers and the marketplace. Business Research's problem was to hold on to their members long enough to train them before they were snatched up by the LOBs.
That afternoon, I met with the second group composed of four members who had entered Business Research after the formal activities of the improvement program had concluded. This meeting turned out to be the most enlightening experience of the day. Since Lawton had not told this group what would be discussed, I began by asking them what they knew about the five-track program. They responded: "What are the five tracks?" Taken aback by this response, I tried a different tack by asking them what they knew about the "Kilmann process," the phrase often used to identify the program. They responded: "We heard that it had something to do with culture, but that's about it. As a matter of fact, we don't even know the purpose of this meeting or why we were chosen to discuss something we know nothing about." I was in a state of shock. My first thought was that the program neither was internalized nor had been passed on to the new members. They did not even know who I was!
Once again I tried a different approach to soliciting reactions to the program. This time I simply asked them what life was like in Business Research and how it compared with their experiences in the rest of the company. Finally, I had hit upon the right question and the discussion came to life: "This is the most cohesive organization I've ever experienced. When you first begin working in other parts of Kodak, they give you a desk and that's about it. Several months later they let you know what's going on and what's expected. Here, I was assigned a mentor, taken to lunch, walked around to meet people, and given a complete orientation package to learn about the organization, its mission, and its procedures." After more comments were offered along these lines, I described the purpose of the five-track program and talked about cultural norms, individual skills, and team spirit. Their reaction to my summary was: "You've just described what we experienced in Business Research from Day One.
Another person in the focused group responded: "There's something different around here. You can feel it. Something happened to this part of the organization that has not been experienced in other parts of Kodak. People are warm, friendly, and they really care about you. There's an enthusiasm and an excitement in this place that is contagious. Secretaries, for example, are involved in everything that goes on. They initiate activities and plan special events. They're highly respected and admired. What is most uncanny in Business Research is that we have no trouble communicating across areas and gaining cooperation from other groups when needed. We never before experienced this kind of work environment in Kodak."
When I asked this group about the problems they encounter in Business Research, one member replied: "The reward system doesn't support team efforts and the system of grades is out of date and confusing." With surprise, I asked about the Special Recognition Plan. The response was: "Oh, that part of the reward system works great. People often get praise and awards soon after some important project has been completed. We even have ceremonies and parties to celebrate our accomplishments. It's the performance appraisal system that is archaic." I then remembered that the fifth track was not permitted to address the formal reward system—only the Special Recognition Plan could be designed by MI. Other comments suggested that Kodak had never altered the company-wide reward system as planned. Not surprisingly, therefore, only the SRP was motivating high performance and sustaining all improvements.
At the end of the day, I left Kodak with a fascinating discovery: Those members of Business Research who had arrived after the formal steps of the improvement program were conducted had never heard of me or the five tracks. Yet they were living proof that the program has had a lasting impact on the functioning of the organization. Ultimately it is organizational success, not names of people or programs, that signifies the achievement of a holistic improvement effort.
LESSONS LEARNED
Implementing a completely integrated program at Eastman Kodak proved to be a worthwhile experience for both members and consultants. The conditions for success were evident in the very beginning: Barabba, the director of Market Intelligence, understood the process of planned change and the sequence of five tracks. He also had sufficient commitment to proceed from Kodak's top management and was prepared to do whatever it took to implement the program amidst a major reorganization and increasing pressures for bottom-line results. Lawton, who took over Barabba's job just before the fifth track was initiated, repeatedly demonstrated his commitment to see the whole program through. Although numerous modifications to the original schedule were made during the implementation stage, all decisions on the content and conduct of the program were guided by the diagnostic stage and by the evolving needs of the organization. This ongoing adaptability keeps the program vibrant and relevant to all key stakeholders—which, essentially, is just what the organization itself must do in order to create and maintain organizational success.
It should be apparent that a special burden falls on the shoulders of those who are in the best position to advocate holistic improvement and to help bring it about: consultants. Naturally, all external consultants should work very hard at eventually becoming unnecessary to their clients, so that organizations themselves fully own the process of improvement and develop the capacity to manage continuous improvement on their own. But if consultants do not argue for an integrated approach, I doubt their clients will. Most organizations are not able to see their own culture, assumptions, and habits themselves: They need an independent, objective view by a specially-trained observer. At the same time, most organizations are not in the business of understanding the principles and practices of systemwide change: They are too focused on short-term operational issues in their own particular industries. Thus it must be the professional responsibility of organizational consultants to teach holistic improvement and to implement completely integrated programs—which requires continued efforts at developing integrated theories, methodologies, and skills for planned change.
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