Causality and Viscosity: Concepts For Understanding Your Organization

One of the most widespread assumptions humans make about the world around them is the linkage between cause and effect. This enables us to explore and understand galaxies, organizations and people. Stuff just does not happen spontaneously. There are always antecedent causes and by discovering these we gain increased understanding and more control. When you know that bacteria causes disease, you can control the disease by controlling the bacteria.

A second assumption is how hysteresis mediates cause and effect relationships. Hysteresis is any delay between the cause and the effect. It describes the viscosity or friction in the system. Put water in the freezer and it takes time to freeze. Announce a new strategic plan and it takes time to go into effect. See a change in the economy and it may take a business years to react.

When an organization is young, it does not always respond well or fully to its environment (customers, competitors, regulators, technology, etc.). There is a lag as the organization 'gets its act together'. This shows up as slow growth, errors and confused focus. With time and experience the organization learns how to get in synch with its environment. At this time the hysteresis shrinks , and the organization grows. Just when the organization thinks it has things figured out, change creeps back in often as a result of the organization's success.

For example the business grows to multiple locations and these multiple locations become a change that now impacts the organization with communication delays and coordination problems. Even if the business and markets are stable, success is likely to attract competitors. The business that learned to set prices based on cost plus or what the market would bear now finds it self competing with businesses who are satisfying the market at a lower price. This change demands a response. Yet the most likely response is to complain about the competitor, believe the competitors low prices will put them out of business shortly and do nothing else. This failure to detect, then respect then respond to the change adds viscosity of hysteresis to the change process. It shows up in declining performance in market share, growth and profits. This delaying of detection, respect and response is the underlying force that creates the 'S' Curve.

The "S" curve depicts a paradox of growth. A paradox which sets a trap for the unwary.

The dynamics of the "S" curve are as follows. In the beginning of growth (A) the growth is slow because that which is growing is unsure of itself and its relationship to the environment which supports it. When this relationship matures, the growth is fast (B).

The very phenomena of growth now leads the growing entity into a new world which has new operating principles, new problems and new opportunities. The skills and knowledge which led to the growth (B) are now inappropriate for continued growth (success) (C). But the growing entity finds it difficult to let go of the old skills, concepts and knowledge which led to its former success (B).

Like the successful fish which learned to move out of the water onto land, it must give up its old ways in order to further succeed on land. Failure to do so leads to decline (D).

Transition to a new set of knowledge and skills is necessary for further success. This transition requires letting go of the past and learning new ways. Although this is effective in enabling the transition, it is inefficient. This inefficiency shows up as confusion, frustration, demand for increased energy, time and other resources.

This inefficiency is symbolically shown as a descent from the top of the first growth curve at (C) to the second growth curve labeled (E). The hesitancy or fear of dropping down in order to go forward often prevents the transition which then leads to (D). While on the dotted line of decline towards (D), the natural strategy is to resist change and support the status quo.

The skilled organization detects change faster, respects it in stead of dismissing or belittling it, and finally responds faster. It does not get stuck wondering if the change is real or dismissing it because it is different. This tightening of the Detection-Respect-Response cycle enables the skilled organization to avoid the terrible price of not changing fast enough, soon enough or deep enough. As the DRR cycle increases in viscosity , it drains the organizations reserves. It will have less money, less time, less energy and fewer of the right people to make the changes needed.

The "S" curve appears to describe a paradox of growth in physical systems like the hysterises curve explaining why magnets and electrical coils behave, to biological systems of population growth, to the nature of organizations and interpersonal relationships.

Ichak Adizes book "Corporate LifeCycles" expands the "S" curve concept into a series of five curves in the successful growth of any organization-corporate, non-profit or government. A parallel set of pathological or declining parts of the "S" curve are also described. Qm² has developed a methodology for assessing where you organization falls on this model the implications for the future of your organization.

Michael Gurian in his book "Love's Journey-The Seasons and Stages of Relationship" has written a parallel description of the various stages and transitions in a marriage.

Determining Inflection:
Knowing When Your Organization Needs to Rethink Itself

All organizations plateau. Operating the organization well causes it to plateau. Plateauing is the normal, natural result of growth. Inflection is the point in an organization's life cycle when it begins to move from growing to aging; the point at which the graph of growth begins to bend.

Plateaus can be avoided by innovation, by rethinking your enterprise or business model. This requires energy and honesty and results in ideas and the ability to assume higher levels of risk. Ultimately moving forward requires a carefully examination of assumptions and letting go some of your closely held methods, products, or processes. Choosing what to keep and what to release is the essence of strategic thinking.

Innovating too early in your grow curve hampers growth. The growing organization needs focus not innovation. The aging or plateauing organization needs innovation. How do you tell when to innovate? Review the twelve pairs of statements below and distribute 100% between each item to reflect your view of your organization. For example:

60%	1.	Building momentum	40%	1.	Running by inertia
80%	2.	Management in control of system	20%	2.	System in control of management

You can distribute 0%/100% or 100%/0% or any other way as long as the item totals 100%.

	1.	Building momentum		1.	Running by inertia
	2.	Management in control of system		2.	System in control of management
	3.	Everything is permitted unless expressly forbidden		3.	Everything is forbidden unless expressly permitted
	4.	Emphasis on content (what we do)		4.	Emphasis on package (how we do)
	5.	"Get what we want" attitude		5.	"Want what we get" attitude.
	6.	Marketing and sales departments carry power		6.	Power transferred to accounting and
	7.	Age of intuition		7.	Age of judgment
	8.	Function more important than form		8.	Form more important than function
	9.	Problems are opportunities		9.	Opportunities are problems
	10.	People are kept for their contribution despite their personality		10.	People are kept for their personality despite their contribution.
	11.	Cash poor		11.	Cash heavy
	12.	Success comes from seeking risk		12.	Success comes from avoiding risk.

Although there are no hard and fast rules on how to evaluate your totals, when the right hand Aging column reaches 20% or more, the growth curve is plateauing. 50%-50% probably means you are at the top of the plateau.