George Roth: Managing Change Requires an Enterprise View

George Roth By Eric Smalley
July 8, 2011

You can learn a lot by comparing successful companies with less successful ones. One critical difference is the ability to manage change. But there are different types of change, and there are different ways of managing change, some more sustainable than others.

George Roth, principal research associate at the MIT Sloan School of Management and head of the Enterprise Change Research Area at MIT’s Lean Advancement Initiative, has spent the bulk of his academic career addressing these questions. He observes companies and analyzes organizational leadership, learning, change, and culture.

The former Digital Equipment Corporation executive has found that a key distinction is change within an organization versus change across an organization and its suppliers, distributors, customers, and other related organizations. Roth dubs this set of relationships an organization’s enterprise, and has put his focus on these enterprise changes. His findings are that there are five capabilities that distinguish companies that successfully manage enterprise change. Many companies Roth observed are manufacturers, but the principles apply to service, design, and engineering firms as well.

These five capabilities are the subject of an SDM Systems Thinking Webinar that Roth is scheduled to deliver on July 25th at noon: Five Capabilities for Enterprise Change: Approaches for Integrating Continuous Improvement and Strategic Change Across Organizations. During the webinar, Roth will detail these capabilities and illustrate them with case studies.

The first capability, enterprise thinking, means that an organization’s people see themselves not just as part of an organization, function, or department, but as part of a larger system, said Roth. "It’s very much related to some of the ideas of systems thinking but it’s focused by the concept of producing a product or service," he said.

The second capability is installing innovations in sets, which makes it possible to manage multiple types of change, including process improvement, restructuring, and managing boundaries (mergers and acquisitions).

The third capability involves balancing two types of change: push and pull. Pull change is organizational learning and development change — teambuilding, visioning, getting people to work together, using such methods as learning principles and managing conflict, said Roth. Push change is planned change involving goals and objectives, measurements, and rewards and incentives. "These are different methods of change and oftentimes companies don’t distinguish between them, and instead of being compatible they end up actually conflicting with one another," he said.

The fourth capability is seeking growth. Some companies that implement continuous improvement activities like Lean do so from a cost perspective, said Roth. But successful companies tend to focus their improvement efforts around growth objectives, he said.

The fifth capability is distributing leadership, which involves developing leaders who take initiative at all levels. A distributed system of leadership pushes information and understanding of what’s going on in the organization to the surface, develops problem-solving skills, and enables people to make improvements that are aligned with one another, Roth said.

Roth developed this set of organizational capabilities over many years of observing companies. His approach to observing companies has evolved. Initially he took a hands-off approach, working much like an anthropologist. Now he is more involved with an organization and its leaders, he said. "My interest is in having an impact, not just studying a system, but being able to engage with the system — with the organization, with the enterprise — to improve it."

George Roth