Mindset for change

With the emergence of increasingly new challenges, managers need to give up long held assumptions and practices, and replace them with a new mindset and behaviour, believes PN Rastogi

People perceive, define, interpret and react, to their environment in terms of their mindsets. The latter consists of experience, beliefs, assumptions, frames of reference, shared schemes, cognitive maps, and learning. Mindset of a person develops over time, and tends to become stable or fixed. It provides a cognitive lens through which a person views the world, makes sense of events and situations, anticipates future, reaches decisions, and acts according to subjective perception and judgement. Managers as individuals, are no exception, regarding the formation and role of their mindsets.

The trouble arises, when relatively static managerial mindsets, are matched against highly dynamic events and situations. Misperception, misinterpretation, faulty appraisal, poor decisions, misdirected effort and actions, follow as consequences. The consequences of the mismatch between fixed managerial mindsets, and ever-changing business reality, may be serious. They can lead to an organisation’s extinction.

Need for a new managerial mindset

With the emergence of more and more new challenges, managers need to give up long held assumptions and practices, and replace them with a new mindset and behaviour. Managers, today, need an open and dynamic mindset, for keeping pace with continuous change. They need a new mental orientation and augmented conceptual skills. They need to develop a mindset attuned to environmental complexity, uncertainty, and rapid change. The requirements for developing such a mindset, may be classified into four broad and inclusive categories, as follows:

1 Replacing a fragmented perspective with a holistic systems approach,

2 Guarding against implicit and entrenched assumptions, and biases,

3. Cultivating new mental orientation and skills, and

4. Internalizing the premises of new business realities.

These requirements are deemed as necessary, but may not be sufficient. They cannot, for example, encompass all, or, even most of the requisite intangible elements, of a powerful mindset. The intangible elements involved here include keenness of perception, sensitivity to weak signals of change, innate keenness ability for synthesis and integration, and a high proclivity for questioning and exploration. The four categories of requirements specified as above, therefore, need to be viewed as broad, inclusive, and indicative, guidelines; rather than as strict or determinate prescriptions. In what follows, the nature and content of the four categories of requirements, are outlined briefly.

1. Replacing a fragmented perspective

A fragmented perspective is characterised by a piecemeal, disjointed, or, incremental approach toward improvement, or implementation of planned change measures. The implicit assumption, or belief, behind this approach, is that solving problems piece by piece will eventually resolve, or correct the larger issue(s) of an extant crisis. But the countervailing tendencies in motion easily neutralise a piecemeal change within a large, complex, and non-linear system, by such a change. A fragmented perspective also fails to connect, and integrate different useful solutions and ideas, into an internally consistent and mutually supportive programme, of planned and purposive change.

The fragmented perspective, or mental orientation, needs to be replaced by holistic perspective, the latter, sees the whole, and views the parts in terms of their places and relationships, within the whole. It recognises the organisation as a total system, with multiple dynamic relationships, both within and across it boundaries. It realises, and seeks to understand, how the parts and functions of the organisation depend on one another, and how changes in one part affect all the others. At the same time, it analyses and assesses different types of management problems, in terms of their contextual background, i.e. sensitivity to context, while keeping the bigger picture in mind.

A holistic mindset, or perspective, inevitably implies an outside-in managerial orientation. The latter, enjoins management to be in close contact with its evolving environment, to focus continually on potential transformations in technology, to monitor evolving demands and expectations of customers, to examine emerging competencies and skills of the competition, and to assess the potential impact of these external changes, on the enterprise as a whole.

The holistic outside-in perspective promotes management’s appreciation of complex, messy, and ill-defined situations that defy classification into familiar categories. It orients managers, towards resolution of ambiguity and paradox, through mapping the structure, functions, processes, and interactions, of the relevant system and/or subsystems. Holistic, or, outside-in perspective, by its very nature and rationale, calls for a well-designed and continuous process of environmental scanning by an organisation. The environmental scanning activity is focussed on evaluating new or emerging opportunities; on customers’ attitudes, priorities, expectations, and demands; and on competitive threats, and tactics of the competitors. The process of evaluation and appraisal, is however, often distorted by the implicit and entrenched assumptions, or beliefs, of the top management. This distortion leads to serious errors of judgement, and highly adverse consequences. The new managerial mindset, therefore, needs to guard against such implicit and entrenched assumptions and biases.

2. Guarding against implicit and entrenched assumptions

As a result of their past successes, and of what has worked well previously, managers tend to internalise uncritically, certain assumptions and beliefs in their thinking and outlook. They forget that past success lays no basis for future success, in a volatile environment. Bases on its implicit and entrenched assumptions concerning the continuing dominance of mainframe computers, IBM ignored the emerging significance of PCs and computer software. As a consequence of such a serious perceptual error, IBM lost its leadership position in the computer industry.

Such a phenomenon of perceptual opaqueness, has termed as the ‘dominant logic’ of a firm ( Prahalad & Bettis, 1986)

Dominant logic refers to the way in which managers in a firm, conceptualise the business, and make critical resource allocation decisions. It is stored via shared schemes, or cognitive maps, and is determined by the managers’ previous experience. The way out of the entrapment by uncritically accepted and entrenched assumptions and beliefs lies in bringing them to surface, examining them critically, and assessing their alternatives. For this purpose, implicit assumptions need to be identified, alternative assumptions need to be generated; each assumptions needs to be critically examined in terms of its implications; and the set of assumptions needs to be tested for internal consistency.

An useful way of locating and examining assumptions, is to view them in terms of a grid as follows:

As shown in Fig 2.1, each assumption is assessed in terms of its strategic importance on the one hand, and degree of certainty, on the other. Assumptions falling in quadrant (C) and (D) can be largely disregarded, while those in quadrant (A) are evaluated as both valid and important. It is only the assumptions falling in the quadrant (B) that deserves the closest scrutiny.

A dialectical procedure is also useful toward an examination of implicit assumptions. A decision choice, or assessment, is first examined in terms of the available data, and the assumptions behind the decision choice, or assessment, are identified. This step is likened to a dialectical thesis. A diametrically opposite decision or assessment, on the basis of the same data, is then appraised in terms of a counter set of assumptions. This stage is likened to antithesis.

To be continued next week