By: N. Kaminka. Adapted and summarized by Tal Alon
In his article "Systematic Innovation: Third Degree Change"*, Kaminka discusses the MHDS organization, and no, it's not a typo. The quotation marks are in place. MHDS stands for an organization that implements systematic innovation, and it has many advantages. It's highly recommended that you read and implement this in your organization.
In our adaptation, we chose to present the essence of the content, but we recommend reading the full original.
Our world is dynamic and changing, and organizations are renewing and evolving as well, among other things, to adapt their mode of operation and character to the changing reality.
The changes occurring in an organization can be divided into three levels, from the most basic to the most complex:
First level: "Visible" changes - activity for economic stability by changing products, work methods, equipment, and streamlining processes.
Second level: Changes requiring a breakthrough in thinking—"out-of-the-box" thinking leads to footholds in new areas, changes of direction and strategy, and significant organizational breakthroughs.
Third level: Changes requiring both systematic thinking and a different type of systematic functioning - those that constantly fuel organizational renewal.
Below, an expansion will be given about each level of change, followed by a focus on the MHDS organization and ways to implement it in practice.
First Level: Visible Changes
These changes can be referred to as "bottom-line" terms: they involve process improvements, service improvements, product improvements, etc., intended to maintain the organization's competitiveness. The improvements and adjustments can help the organization reduce its costs and increase its revenues. These changes promote the organization's growth to stability or stagnation before the fall.
People in these organizations' business development departments are working on developing a new generation of products and/or services that will enter the system at the right time to cover the reduction in sales of the previous generation’s products and to help reduce the organization's costs. When implementing successful changes at this level, the organization can maintain its economic stability and improve its performance.
However, these innovative organizations sometimes suffer from intense competition, as the "fruits" of the change are visible, and therefore, the ability to copy is very high - competing organizations can easily and quickly copy the same products and services that the organization trying to innovate has worked hard on. An exhausting organizational reality is created, requiring an endless "efficiency race," which usually yields, in the best-case scenario, maintenance of economic stability.
Second Level: Breakthrough in Thinking
Some managers and employees are endowed with traits and skills that allow them to dream, innovate, and initiate new ideas for different products or services. If they manage correctly, they can lead the organization into a new field or change direction. These changes begin with breakthrough thinking and can lead to significant organizational breakthroughs, such as the establishment of new organizations (subsidiaries/sister companies).
Such organizations can identify points on their development axis as significant turning points and certain people as change-generating figures. However, the changes are derived from the abilities of "exceptional individuals" in the organization, and when they leave, they usually have no replacement.
Third Level: Systematicity in Cognitive and Functional Change
Organizations where this level is implemented are organizations that are constantly renewing. Their managers and employees think and function in a different and long-term systematic way. They adopt norms and processes that cause them to think and behave differently; thus, change is always happening. This systematic renewal begins in the invisible realm (its origin is cognitive - thinking), and we will likely see significant breakthroughs and insights.
Why? Unlike changes from the second level, these are not sporadic innovations by "exceptional individuals." Instead, they involve an organization-wide implementation of cognitive, behavioral, normative, managerial, and psychological elements that lead all managers and employees of the organization to innovate constantly.
This is where we find the MHDS organization—an organization that implements systematic innovation. Such an organization is likely to have not only survival capability but also a very high level of performance that can lead to market leadership.
Summary Table - What's Between the Levels of Change?
The different levels differ in the depth and essence of the change. To better understand the changes at different levels, here is a table presenting the components of change at each level according to various parameters.
Level 1 - Visible Changes | Level 2 - Breakthrough in Thinking | Level 3 - Systematic Changes in Thinking and Functioning | |
The source of change | Professional activity anchored in work processes to improve organizational outputs | Analytical | Cognitive, analytical, behavioral, psychological, and managerial. |
The nature of change | Trend-oriented, guided by the pursuit of maintaining the organization's competitive ability | Circumstantial, dependent on identifying a threatening or inviting market trend, or arising from a deliberate effort to improve the organization's products and services. | After proper implementation – permanent. |
The results of the change | Improvements in processes, product, service, etc.; economic stability | New products, new services, and sometimes organizational breakthroughs | |
The timing of the change | Specific, occurs during a crisis or in anticipation of a crisis | Specific and sometimes incidental. | |
Change-generating factors or "Change agents" | The organizational efficiency experts | Certain brilliant managers and employees, endowed with a natural ability to dream, innovate, and initiate. | |
Time range of the change's impact | Until the end of the product's and/or the new service's life. | Until the end of the new product's and/or service's life, and sometimes with a longer-lasting impact. |
So, how do we implement systematic innovation in our organizations?
The phrase "The end of the deed is in the beginning" will be slightly adapted here to "The end of the deed is in the thinking at the beginning." The primary need is to change the way of thinking of the organization's managers and employees to change the organization's nature. And yes, it is possible to change the way people think.
How do we do this?
We ask questions focused on the future rather than the past or present. Such questions lead us to think one step ahead toward the broader goal we want to achieve. Different questions may encourage creative thinking that will lead to results beyond expectations.
In addition to asking the right questions, taking several additional measures from management, psychology, cognition, and behavior is also recommended. They can be categorized as those related to the organization's "spirit" (vision and goals), work environment, work processes prevalent in the organization, adoption of different thinking patterns, and management style. Here are the details:
Organization's "Spirit":
Organizational vision - no longer just a slogan on paper. Strive for its daily realization by engaging organizational members in its definition, understanding its importance, and achieving its goals.
Organizational goals are periodically reexamined. The topics on the agenda are based on future thinking and stem directly from the goals’ definitions.
Work Environment:
Tolerance for ambiguity and uncertainty. Organizational members can function even in conditions that are not entirely clear, trying to break boundaries while neutralizing the fear of operating in unfamiliar areas.
Willingness to deal with inaccurate information. Organizational members understand that calculated risks can be taken to achieve shared goals and that failure on the way to achieving them will be absorbed and not be a personal detriment.
Work Processes:
Encouraging innovation through structured methodology and work processes. Innovation is an integral part of managers' and employees' daily work. "Insights" are not left to chance; they occur due to the systematic identification of thinking processes that led to their predecessors and their reuse.
Implementing the principle of involvement and participation will help us transition to different systematic functioning at the organizational level. This means discussing who among the organizational members should be involved in discussing a particular topic, at what stage, and at what level.
Engaging additional people to achieve shared goals. Managers try to understand who can contribute, assist with the issue, and engage them to achieve the goals.
Perception and Thinking:
Perceiving change as the constant state of the organization. Every solution is seen as temporary; organizational members initiate changes and even seek them out.
Methodological implementation of "breakthrough thinking." A concept coined by Shackler and Hibino. It means a different problem-solving approach based on generalizing the thinking and functioning of people is considered more effective in their field: those who solve problems more successfully are more creative in outlining courses of action and are better at achieving results. In their activities, they generate agreement and motivate those around them.
Management and Leadership:
Implementing "transformational leadership," i.e., managers who intellectually challenge their employees and inspire them by setting a personal example in their areas of activity.
Constant engagement of managers in clarifying goals, development directions, future thinking, and empowering subordinates. Thinking focuses on long-term opportunities and encourages subordinates to solve problems independently.
Managers serve as "shock absorbers" for subordinates. Thoughtful problem-solving sometimes requires peace of mind; therefore, in certain cases, pressure shouldn’t delay subordinates’ problem-solving.
Managers see the "big picture" and expand possibilities for dealing with challenges. Managers are willing to take reasonable risks and personally demonstrate organizational dedication and willingness to tread new paths toward possible solutions.
In conclusion, the levels of change do not necessarily replace one another. In an innovating organization, all three can be found in different combinations: visible changes due to the regular activity of business development personnel and changes resulting from the breakthrough thinking of brilliant individuals. However, the most profound and most significant changes are those from the third level. Such changes can lead the organization to new realms, as their implementation may lead to important breakthroughs. Managers of organizations who bring about the required cultural-cognitive change may enjoy the fruits of the renewed and renewed organization.
Good luck. Again, it is recommended that you read the full article.
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