Case Study: Case of Chaos

The following story is based upon a number of situations. Names, locations, and other facts have been changed to illustrate and simplify the case presented. As such, any resulting similarity to any one business or person is coincidental.

There was a question at my seminar in Minneapolis regarding something I hadn’t covered. “We’re installing a new estimating system,” the young man from the 50+ employee operation said, “and it’s just creating chaos. Any ideas on why that is?” Well, yes. I have a number of ideas of what it could be, but I think mainly that he has identified a symptom rather than a cause.

Think of this image: Pretend one of the famous Egyptian pyramids was made of ice. Now let’s put it into an ocean upside down so that what we see on the surface is the big flat bottom of the pyramid. Now divide the height (err, now the depth) of the pyramid into three equal sections. The bottom third (the pointy top of the pyramid) is pointed toward the ocean’s bottom and is labeled “Ownership.” The center third would be labeled “Structural” and the bottom of the pyramid, which is floating on the surface, comprises the final third, which we will label “Operations.”

Now envision a crack in the all-ice pyramid that begins in the bottom third; the tip pointed toward the ocean floor. Given time, that crack will work its way through all the layers until it reaches the flat surface. But it won’t be one crack by then. That one crack could show up as hundreds of cracks on the surface. And other cracks that begin in the middle third of the ice pyramid would also rise and multiply on the surface. So, in my view, my friend is standing on the flat surface of the upside down pyramid and seeing all sorts of cracks in the operations of this business as the ocean waves rock this ice pyramid from side to side.

The temptation to patch a crack instead of fixing the problem is overwhelming, but the only real cure is to actually fix the underlying causes, and that takes a lot more perception. So, while the problem is the estimating system, it’s also more than the estimating system.

Nevertheless, let’s begin with the easy task. The estimating standards/pricing aren’t right in the new system, so people don’t trust it and are having to do twice the work. They do it the new way and then do it the old way, hoping they match, which leads to a lot of frustration. He agreed that this condition existed, so there is straightforward work that needs to be done to nail that down. If no one trusts the system, then chaos occurs because there is at least twice the amount of work to do. So, yes, fix it.

But that isn’t the real issue, in my opinion.

Root Cause

My guess is that management did little to prepare everyone for change. And I don’t just mean talking about the fact that it is a done deal which will be installed on Friday. There are a number of models for organizational change, but the most basic one is the work of Kurt Lewin in which he describes change in three stages: unfreezing, actual change, and what many call re-freezing.

Stage one—or unfreezing—involves overcoming inertia and dismantling the existing pattern among the workers. This is the touchy feely stuff where we figure out what we want to do and why. My guess is, although I don’t know for certain, there was little to no preparation done for the new system.

Richard Beckhard and David Gleicher developed Gleicher’s formula, which says that dissatisfaction with the way things are now, coupled with a vision of what is possible, multiplied by some concrete steps, has to be more than resistance or the cost of change. The cost of change includes the cost of the estimating system, but more importantly, includes the psychological cost of change.

Okay, my guess is that not a lot of work was done in appropriately laying the groundwork among the people who do the work for a material change in the way they do it. Yes, I got an agreement on that point. Hmmm. Imagine—they’re seeing chaos among the workers. But that’s not all.