The Importance of Contracting Gracefully

I often find myself advocating a natural systems perspective for organizational development. I frequenly am heard saying that "effective organizations are flexible and organic". I just recently had an "ah ha" moment around this:

In organizations, expansion implies success and contraction implies failure. To my systems thinking mind, expansion and contraction are just opposite forces or directions and are neither good nor bad. Only our experience of a this shift in movement is good or bad.

In order for an organization to truly be flexible and organic it must be capable to both expand and contract in a graceful and nimble way. Scaling up to serve an increase in demand is mathematically no different than scaling down in times of decreased demand. Why should scaling up feel like success to the people involved while scaling down feels like failure?

An organization is not just a math and physics equation, and contraction is not just movement in the opposite direction of expansion. The numbers of positions, for example, represent people who are concerned with paying mortgages and putting children through college. How then, can the organization become graceful in contraction?

I certainly don't have all the answers for this. This post is about exploring the topic in hopes for taking some of the sting out of the experience of contraction, both for indviduals and the organizaton.

Let's look at an example from the Forest Service. The Forest Service Enterprise Program is a group of small intraprises, or internal businesses which serve agency units via a signed work order agreement. Enterprise units don't receive appropriated funds in the annual agency budget, but rather sell goods and services to traditional agency units in order to cover all their costs.

The health of the ~17 Enterprise units is bound together in the agency's accounting system. If an Enterprise unit does not cover its costs and accrues a deficit then the team may be disbanded. The employees of the disbanded unit are placed in other positions, or sometimes exit the agency altogether. One core strength of the Enterprise Program is its flexibility to help a National Forest, for example, scale up for a particular project and scale back down when the project is over. Within the culture of the Enterprise Program, expanding one's Enterprise unit by increasing the number of employees and increasing the revenue is a mark of success.

However, if a unit is unable to cover its expenses (for any number of reasons), then a deficit accrues, the unit is a candidate for being disbanded by the Enterprise Steering Committee, and the unit's employees are at jeopardy of loosing their positions.

In our culture, this disbandment is interpreted as a failure. The leader of the unit has invested much time and energy in attempting to create a successful venture. It is personally dramatic to realize that the venture is not sustainable. There is also a personal sense of failure for the indivudual employees, especially if they were engaged in working hard to "turn it around" for a number of months before the disbandment. (I have first hand experience with this, I'll write about it in a separate post). It is all quite painful.

But what if there were another context, another connotation for disbandment of an Enterprise? What if Enterprises with deficits were responsible for coming forward and recommending that they be disbanded, rather than living in fear of a heavy hand coming down on them? What if struggling Enterprises were seen as courageous and heroic for choosing their own disbandment? One success of Enterprise is that it is a choice-based organization. Individuals choose to start units, why shouldn't they choose to end them?

It should be seen as courageous because of the risk and uncertainty involved in volunteering to have your box erased from the org chart. It should be heroic because a struggling unit which drags on and on is only increasing the deficit which is actually a burden on the entire program due to the interconnections in the accounting system.

Could being viewed as courageous and heroic take some of the sting out of the experience for the individuals? I believe it would. That was my own experience. Would shifting our cultural connotation from "failure" to "heroism" facilitate a more graceful contraction? Afterall, if an organization is going to be flexible and organic, they must exhale as effectively as then inhale.