The Change Codes

by Joe Flower
International Copyright 1995 Joe Flower All Rights Reserved
Please see our free downloading policy.

The Change Codes are distilled from our observations of hundreds of

organizations, communities, and families going through change. They seem to
remain valid at different scales and in different contexts. Test them in your
environment, and tell us what you find.
1 Stay grounded
Never change for the sake of change. Never stay still for fear of change. When you
move, move whole-heartedly. This helps keep the organization, the family, the
relationship, clear and unconfused.
2 Face forward
Change is a one-way gate. You can't "go back to the way things were" any more
than you can unscramble eggs. Even changes that seem cyclical or circular (the
company lays people off, hires them back, lays them off; you break off a
relationship, start a new one) actually work more like a spiral: you may be on the
same side of the curve again, but it's not quite the same - every time is different.
3 Expect change
It is in the nature of complex adaptive systems to change. (You are a complex
adaptive system. So is your organization. So is your family, and your relationship.)
4 Expect a bumpy ride
The most common rhythm of change is what paleontologists call "punctuated
equilibrium" - long periods of what seems to be "business as usual" punctuated by
rapid, chaotic change.
5 Look for change at each scale
Changes can happen between the organization and other organizations, between the
parts of an organization, between individuals, or within individuals - and each
change causes other changes at the higher and lower levels.

6 Expect change to evolve

Changes work together, like an eco-system. Each change makes a whole series of
other changes possible - and shuts off still other changes before they can get
started. Mr. Ford's invention of the mass-produced automobile precipitated myriad
changes in roads, the oil industry, the law, the nature of war and the social structure
of Burma, among other things - at the same time that it stopped the development of
buggies.

7 Expect the unexpectable

Even when there is no particular outside influence to cause it, look for the
paradoxical or strange result: add capacity and production falls. Lose a client, gain
two others as a result. Solve the communications problem between finance and
design, and the motor pool slows down. Simple causes, interacting over and over,
can produce complex and surprising effects. Simple, "linear" changes in input can
produce shockingly "non-linear" outputs. We see this all the time in organizations.
But we tend to attribute the weird outcomes to outside influences, or to hidden
factors that had escaped our notice. In reality the system itself, even a seemingly
simple one, can produce very strange "emergent" outcomes. If we understand this
and search for them, we are more likely to be ready for paradoxical, non-linear,
strange behaviors.

8 Tell the truth

Information is the fiber of self-organizing adaptive systems. Tight control of
information - which is normal in organizations and families - stymies successful
adaptation. Information flowing upward allows the organization to evolve.
Information flowing downward keeps the organization focused. Information
flowing side-to-side keeps the organization coherent. Much of the atherosclerosis
of organizations and relationships comes from blocks to the free flow of
information. Without good information, people get paranoid. They build their
fortresses higher. Tell the truth about everything, as far as is possible within the law
and privacy concerns.

9 Increase communications
If you are going through changes, you need everyone on board. Increase not only
the volume but the types and directions of communications. Make sure they are not
only one-to-many, but also many-to-one and many-to-many. This is as true of a
family or relationship as it is of an organization.

10 Listen actively, avidly

You need to know what your customers really think, what your subordinates really
think, even what your suppliers, neighbors, competitors, and union stewards think.
You may or may not enjoy hearing it, but it is vital to you. Do it formally, with
surveys and focus groups, or informally in bull sessions and casual conversations,
but do it. If you do it just enough to seem like a caring boss, a sensitive mate, or an
involved parent, you will soon engender bitterness in those you are pretending to
hear. You must do it with your whole self, and you must act on what you hear.

11 Notice the feedback your system gets

The organization, in its collective mind, has a model of "the world out there." It
anticipates the future situation in that world and makes predictions about what will
work: "If we make make the cars bigger, people will buy more of them." Or:
"People will gladly pay more for better service." Then it looks for feedback: did it
work? Is that what "the world out there" is really like? What sort of feedback is
your organization getting? How does it get that feedback?

12 Notice how your system anticipates the future

Notice this in the way it is put together, the decisions it makes, the direction it
moves. Every system positions itself to deal with what it really believes is about to
happen. If it isn't organizing itself the way you think it should, chances are that
(correctly or not) it doesn't believe in the same future that you do. How are you
organized? How is your family organized?

13 Widen your environmental scanning

Go beyond "competitive intelligence," the art of scoping out what the other guy is
doing. Ask what technical or organizational achievement could put you both out of
business. How could your customers be satisfied so much better, easier, faster, or
cheaper that you could not compete? If you are a video store, what happens when
people can download any movie they want on demand over the cable lines? What
might the equivalent be in your business? How could you pre-empt the
competition?

14 Don't rely too much on forecasts

They are an important part of your environmental scanning, but they can be fatally
flawed by lack of information, faulty assumptions, or the appearance of major new
factors outside the range of the forecast. No one can see the future.

15 Lay out a vision of a future that works

We all deal better with change if we have somewhere important to go. We can't see
the future, but we can envision a future that is both attractive and possible. This
future must be expressed freely throughout the system. Each part of an organization
must be asked for its own image of how that vision becomes real. A couple must
work out a vision of a common future, and express that vision freely and frequently
to each other. So must a family, or a community. A compelling vision guides us to
changes that are appropriate, and results in a "future pull."

16 Make up what you are doing

Make it up as close to the action as possible. Organizations are run by "rule sets" rules of thumb, conscious or unexpressed, that guide how the organization and the
people in it, are expected to behave. Imported "rule sets" (such as benchmarking, or
zero-based budgeting, or a directive from the board) may embody great wisdom,
but if they are to work they must be adapted to the local reality. One example: in
1985, when Disney imported a crack financial team from Marriott, the new team's
"rule set" had to be changed significantly to deal with Disney's creative filmmaking and theme-park business. For "rule sets" to be consistent with the integrity
of the organization, they must come from leadership, from the top down. But for
them to be effective, useful, and lively, they must come from the bottom up - they
must be informed by what works.

17 Watch behavior, not structure

What your organization actually does, and how it does it, is more important than
how it is put together - and the behavior can change much more swiftly than the
structure. Structure can mislead us. The board's ultimate power, for instance, is only
important if the board is inclined to use it. On the other hand, the power of workers
to help, to hinder, and even indirectly to influence the direction of the organization
is often greater than their position on the "wiring diagram" would admit.

18 Avoid the "Daddy Syndrome"

Too often, confronted with a difficult change, we refer upwards, to what "they"
ought to do: the government ought to, the CEO ought to, headquarters ought to. Or
we refer to the past: this should have been in the contract, we should have gotten
into this earlier, our parents should have raised us differently. This is the "Daddy
Syndrome," and it is a key way to be completely right (your perceptions may well
be dead accurate) and still do yourself no good at all.

19 Use what you have

Ask, "What can we do here? At this level? With what we've got? What resources do
we have? How quickly and easily can we get more? Who can help us do this? What
resources do we have that we aren't using, that we haven't thought of, that didn't
seem to apply?"

20 Find the feedback loops

Organizations are rich in both positive and negative feedback loops. The interaction
of these loops, one pulling toward stasis, toward the "normal" situation, the other
kicking the situation in some new direction, largely determine the behavior of any
complex adaptive system - such as your organization. Sketch these feedback loops
in your organization.

21 Expect everyone to do what is best for them

Count on each person in the organization, and each piece of the organization, in the
long run, to do what seems in their best interest given the information that they
have.

22 Don't penalize mistakes

Skip the blame. Punishing someone because they bet on the wrong horse does not
teach them to bet on the right horse. It teaches them to avoid betting, to stick out no
neck that might be their own. This diminishes their nimbleness. Skip the blame
even if you are right.

23 Make the system a learning organism

Whatever it does, whether it makes computer chips, builds dams, raises children,
fills out letters of credit, or plays Stravinsky's "Sacre du Printemps," it must
become a learning organism, or it will become rigid. It must do this top to bottom.
Learning is for everyone. Learning is not peripheral to your organization's goals, it
is central.

24 Let people discover what works

Ask them to notice it in detail, and get them to pass it on. The people who work
individual processes, if asked and allowed, will discover it faster than any
outsiders, including you.

25 Be at least as willing to fire leaders as followers

Relatively few of the problems in an organization are due to "bad apples," gross
incompetence, or venality. Most are due to systemic problems. All "bad apples"
should be removed, if possible, or isolated if they cannot be removed. Low in the
organization, however, "bad apples" have little scope, and affect only a few
customers or subordinates. Higher up, they can affect the whole organization,
destroying people's livelihoods, disrupting the organization's mission, and
interfering with the organization's ability to change.

26 Push decision-making downward

Put people in charge of their jobs. Put the power of decisions about each process in
the hands of the people who perform the process. This builds flexibility. Do this
informally, by delegation, or formally, through benchmarking, quality improvement
teams, or any of the several forms of corporate democracy.

27 Push decision-making outwards

Import information, export control. Strengthen your links to your customers and
suppliers so that they have real, timely say in your decisions. Do this informally,
through constant conversation, or formally, through contracts and advisory boards.
Strengthen your links to your mate so that you make decisions together truly, not in
form only.

28 Flatten and crosslink the organization

If marketing can only communicate to manufacturing through headquarters, up and
down six layers of management, marketing will not spend much effort talking to
manufacturing, and will not have the information it needs. Instead, make crossfunctional teams a basic, normal way of doing business.

29 Market share, not profits - quality, not size

Size and profit grow from quality and market share. Profit is momentary, a
relationship between costs and market prices that can easily disappear. Size can
actually be a problem if it is not well-integrated. Quality and market share translate
into things that can be very useful when the the winds of change howl down your
valley, things like reputation, name recognition, and the trust of your customers,
suppliers, and investors.

30 Do what you are good at

Build on your core competencies. This gives you guidance when you can or must
move quickly to deal with change. If you are a hospital, what business are you in:
managing a large, hotel-like complex with operating rooms and laboratories
attached? Or fostering the health of a population? Nintendo is very clear that it is in
the business of providing a certain type of entertainment, not of providing a
platform for any other type of entertainment. Sears stumbled when it misunderstood
its basic competence in providing reliable, low-cost retail access, and expanded into
financial services, real estate, consumer credit, and other businesses.

31 Walk a mile in their shoes

You spend serious time looking at your competitors, your subordinates, your
suppliers, and your customers. Flip it over: spend some serious time looking at
yourself from their point of view as well as from the point of view of noncustomers, potential competitors, possible strategic partners. Take their view
seriously; adopt it, at least for a moment. If you don't know their point of view, find
it out. Go to the center of the forces of change that are coming at you, and look at
yourself from there. It will give you unique information.

32 Increase your speed

Cutting your "cycle times" - the time it takes your organization to move an idea to
market, or to complete any particular process - gives you both strategic advantages
and greater flexibility. Speed trains your organization in nimbleness.

33 Be prepared to sign up
When change happens, there comes a time when the bus is on your block. Get on.
You cannot ignore it. If you try, the time and manner in which you join will be
picked for you, in a way that you will least expect. Every change carries something
that you can use. Pick your moment, and go with it.

34 Let go
Whatever ship you steer, use all your skill and experience. But you and the ship
will do better if you recognize the limits of what you control. There are ports you
are too big to enter. There are storms from which it is better to run.

35 Be mindful
Notice. Trust your gut. Listen. Feel. It makes a difference