The Second Cycle: Winning the War Against Bureaucracy [Hardcover]

Lars Kolind (Author)

Book Description

ISBN-10: 0131736299 | ISBN-13: 978-0131736290 | Publication Date: May 4, 2006 | Edition: 1

You're growing fast. You're profitable. Maybe they're even writing great things about you in the business press. But, just beneath the surface, are you incubating the seeds of disaster? It's happened over and over again, in one industry after another, to companies ranging from IBM to Upjohn. In this book, Lars Kolind helps you uncover the earliest signs of trouble--and reignite a powerful new growth cycle. Drawing upon his own experience as the CEO who turned around Oticon, the world's top manufacturer of hearing aids, Kolind introduces a comprehensive toolbox for revitalizing mature organizations: tools for creating consensus around change, using staff more effectively, promoting innovation, and much more. Finally, he applies his tools to a wide range of organizations in decline, including the U.S. auto industry. The result: specific, practical advice you can adapt to galvanize your organization, no matter how well you're doing today.

Editorial Reviews

About the Author

LARS KOLIND was CEO of Oticon and the driving force behind the innovation and knowledge-based turnaround that led to Oticon’s leadership in the world market for hearing aids. Named Denmark’s Man of The Year 1996, his work at Oticon is a classic management case study presented at many leading business schools worldwide.

 

He currently serves as non-executive board member or chairman of several corporations, including world-leading pump manufacturer Grundfos, Unimerco Group, Scancom International, Zealand Pharma, Kristeligt Dagblad, and BankInvest Ventures.

 

Kolind is active in venture investment, and writes, speaks, and advises widely on strategy, knowledge, innovation, and corporate turnarounds. He has co-founded and chaired three national initiatives to help prepare Denmark for the knowledge society, including The National Business Network for Corporate Social Responsibility, The Copenhagen Center, and The Danish Competency Council, which in 1999 published Denmark’s first national accounts on human capital.

 

A mathematician and leader, he is a principal of the Q Thought Leader Network, and serves international Scouting as deputy chairman of the board of The World Scout Foundation. He is also adjunct professor of leadership at the Aarhus School of Business.

 

More information and tools are available for readers at www.thesecondcycle.com.

Excerpt. © Reprinted by permission. All rights reserved.

The Second Cycle: Winning the War Against Bureaucracy

Preface

During the time I worked on this book in 2005, the news was full of stories about Ford and General Motors selling off assets, labor unions losing members, ever new problems hitting the Catholic Church, public schools being criticized for lack of relevance, German industry unable to meet competition from low-wage countries, the Bush administration stuck in scandals, and numerous other well-established institutions in deep trouble. It seems that everybody accepts that the upward part of the corporate lifecycle must be followed by a downward part that ends with extinction. The Roman Empire, The Soviet Union, The British car industry, Digital Equipment Corporation, Enron, and Arthur Andersen are but a few examples of the corporate lifecycle curve that most people believe is as fundamental to business as Newton's Law of Gravity is to classical physics.

There is little doubt that there are mechanisms associated with success that tend to transform once agile and creative organizations into complacent bureaucracies. However, the big question is why top managers overlook these mechanisms in their own organizations, even at times when their organizations' lack of performance is obvious to outsiders. What is it that blinds management and prevents it from taking appropriate action? Why is this disease allowed to develop for so long that it is often impossible to cure when it has finally been discovered? And what can be done to revert or avoid decline and perhaps even establish a platform for renewed growth, a second cycle?

To find an answer to these questions, I used my personal experience as a starting point. I reflected upon the organizations I had worked for, either as an employee, a manager, a board member, or a volunteer. I searched for small things under the surface that indicated or influenced the mechanisms behind the corporate lifecycles. I was particularly struck by several examples where organizations possessed knowledge, ideas, technologies, or people that could have brought them into the world league of their industry if opportunities had been managed properly; but they never followed those opportunities. I realized that opportunities were most often lost when the organization appeared to be most successful—not when it was in trouble.

This book neither fits into the mold of a conventional management textbook nor is it an autobiography. My experience with conventional management textbooks is that authors often attempt to make something look like a theory that has very little theoretical substance. Simple points that could be conveyed in a minimal amount of text are often explained and illustrated with so much excess text that the message gets lost. On the other hand, autobiographies often seem to serve only one purpose: to celebrate the merits of the author.

I call this an experience-based hands-on management book. It is written for easy reading—not loaded with unnecessary theory and references. It is designed to be useful for managers, politicians, volunteers, students, and others who are involved in or concerned about the future of their organizations. It recognizes current theories of management, but builds primarily on practical experience—that is, what has worked for me. I have not studied the behavior of hundreds of organizations in order to back up my recommendations with solid statistical evidence. However, this has given me more freedom to express my points bluntly and clearly. You will have to determine whether these recommendations apply to your organization.

The book has four parts.

First is an analysis of the mechanism of the conventional corporate lifecycle, in particular, why organizations become stagnate and decline at times when they think they are highly successful.

Second, you will find a proposed design for a new platform for innovation and growth—the second cycle. This platform stands on four pillars and each pillar has its own chapter: meaning, partnership, collaboration, and leadership.

Third, I invite you to look into my toolbox. It contains seven tools that I have used to diagnose an organization, establish a new foundation for it, and move it into a second cycle of sustained innovation and growth.

Fourth, I illustrate the main points of this book with three living examples of organizations that in my view are experiencing severe decline because they have not realized the need to move into a second cycle. I finish by putting the examples into greater perspective: how we could enjoy much more growth and prosperity if mature organizations were able and willing to jump out of their conventional lifecycles and start a new second cycle.

For inspiration, I have enclosed as an appendix the most significant case study I know about organizational transformation: the rebirth of troubled hearing aid manufacturer Oticon into the industry leader in the 1990s. That story taught me about both organizational decline and what it can take to jump into a second cycle. May it inspire you as well.

Throughout this book, I invite you to take a moment and reflect on your own situation or other organizations you know, in light of what you read. Watch for the symbol!

—Lars Kolind

© Copyright Pearson Education. All rights reserved.

Product Details

• Hardcover: 256 pages
• Publisher: Pearson Prentice Hall; 1 edition (May 4, 2006)
• Language: English
• ISBN-10: 0131736299
• ISBN-13: 978-0131736290
• Product Dimensions: 9.2 x 6.9 x 1 inches
• Shipping Weight: 1.1 pounds
• Average Customer Review: 4.5 out of 5 stars  See all reviews (8 customer reviews)
• Amazon Best Sellers Rank: #727,101 in Books (See Top 100 in Books)

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Most Helpful Customer Reviews

5 of 5 people found the following review helpful:

5.0 out of 5 stars Innovate To Win, July 28, 2006

By 

K. Johnson (US/Asia) - See all my reviews
(VINE VOICE)    (REAL NAME)   

This review is from: The Second Cycle: Winning the War Against Bureaucracy (Hardcover)

"The Second Cycle: Winning the War Against Bureaucracy," has a lot of variety and its title containing the term "bureaucracy" may be misleading to some. "Innovation" is in the title also, and much more prominent on the cover, and the book.

Chapters:

1. The first cycle: Why Success Breeds Failure
2. The Second Cycle: A New Paradign
3. Meaning
4. Partnership
5. From Hierarchy to Collaboration
6. Leadership
7. The Toolbox
8. Three Live Case Studies
9. Conclusion

Appendix: how Oticon entered The Second Cycle.

Each chapter has sub-chapters that reinforce the chapter topic.

As a contemporary business book, it's for companies of all sizes and every industry. Author Lars Kolind provides numerous case studies, tables, some theory, and figures, for the work and business model of today where "most of those straightforward and well-defined jobs are gone" (Kolind, 67). These jobs have been relocated to countries with cheap labor. Robots and machines are now performing many of the tasks of what these low-cost workers are doing. This book also has a self-assessment profile and a questionnaire. Items detailed are the recruitment process, individual development of the employee, manager development, and org. development. Where is the best place for the innovative mentality to be nurtured and promoted today? Education: Kolind aptly notes it's the schools, and it starts with Primary Education. Focusing on individuality, finding strengths, creativity, and yes, "fun."

Enter the "Knowledge Worker." This worker's job isn't narrowly defined, tasks are less controlled by management, individuality, creativity, and flexibility is a must. And, for this knowledge based worker, we need the KBM: Knowledge Based Management. People- management is not always knowledge management based. Kolind also provides a case study on labor unions (although they're declining) and notes union importance in our knowledge-based society. As the worker becomes an independent contractor we are again reminded that:

"Employers are capitalists that look upon workers purely as production factor. Employers will use any means to maximize profit. They will hire and fire employees according to short-term need, and they will strive to pay minimum amounts per working hour" (Kolind, 161). And yes, the workers have their interests, also. It's a two-way relationship, but often not symbiotic in today's global world, that is flattening before us.

Kolind gives specific examples of changing organization styles starting with the old Line Staff Organization style of the U.S. auto industry in the early 20th Century. From heuristic bureaucratic theorist Max Weber, line staff separates employees and specialists in a hierarchical relationship. The benefits of line are: constant, high-quality output, minimal training cost, etc. Obviously in some industries this is most optimum. For other industries, it isn't. The 'Innovation and Mass Customization' style is for R&D, customer service, business development, and tech, today.

One concept in the Meaning Chapter was the "Acid Test." You ask, "what if our organization didn't exist." Another concept is the "Obituary Test." What would be written in your organization's obituary if: a) your customers wrote it? b) competitors wrote it? c) what would this industry be like if your org. died? d) has your company made a real difference to the people it affects?

Kolind notes the common perception that upward cycles inevitably lead to downward cycles not only in business but in civilization in general. The rise and fall of the Roman Empire, Soviet Union, British Car Industry, Enron, and other industries. There are reasons for these declines and subsequent extinction.

Large, older, established, and successful organizations that are declining often can show favorable financial statements because they downsize and do Mergers & Acquisitions. But when organizations are in this mind-set they can be maintaining their position instead of questioning it.

Informative, well-written, great read.

4 of 4 people found the following review helpful:

5.0 out of 5 stars Fight Tomorrow's Bloat, June 29, 2006

By 

Craig L. Howe "The Pointed Pundit" (Darien, CT United States) - See all my reviews
(VINE VOICE)    (REAL NAME)   

This review is from: The Second Cycle: Winning the War Against Bureaucracy (Hardcover)

Many have wondered how once nimble and creative organizations transform themselves into complacent, bloated bureaucracies.

The bigger question is why managers remain blind to the deterioration long after it is obvious to many.

Lars Kolind, the driver of Oticon's turn-around that lead to its assuming leadership in the world's hearing aid market, offers four thoughts to avoid bloat in this well-written book. He:

1. Analyzes the mechanism of the conventional corporate lifecycle.
2. Proposes four pillars for a new platform of innovation and growth that he calls the second cycle: Meaning, Partnership, Collaboration and Leadership.
3. Offers a grab bag of seven tools he used to diagnose your organization and establish a new foundation for it.
4. Illustrates his points with three case studies.

The book is readable, actionable, specific and actionable. You cannot ask for much more from a book that retails for less than $18.00.

3 of 3 people found the following review helpful:

5.0 out of 5 stars Interesting techniques to turn around a business., June 11, 2006

By 

John Matlock "Gunny" (Winnemucca, NV) - See all my reviews
(REAL NAME)   

This review is from: The Second Cycle: Winning the War Against Bureaucracy (Hardcover)

Lars Kolind became CEO of a company that desparately needed turning around, and as CEO he was able to do just that. In doing so he came up with a method of analyzing companies that takes into account their products, customers, workers, and several other aspects. All in all this seemed like an excellent approach.

Then he applied these techniques to three 'industries' badly in need of turning around: the primary school system, labor unions, General Motors. I find myself wondering if his techniques are capable of such monumental changes. Indeed I wonder if any techniques are capable of fixing these three areas.

I find myself continuing to think more about General Motors than I do the other two. If you were CEO of GM, what could you do to fix it. He says the challenge for the U.S. automobile industry is to produce transportation that is environmentally sustainable, yet safe, fast, reliable, comfortable, and fun!

That's a pretty tall order. One thing he says is that by 2020 automobiles will be hydrogen powered. If that is true, then the obvious is to start pouring research money into hydrogen power, to get some of the crucial patents, processes and procedures developed, etc.

But suppose that hydrogen power doesn't turn out to be the answer (big problem - where do you get the hydrogen), then all of your research and planning effort is waste.

The problems with turning around GM are huge. There's a $2,000 per car cost in paying the retirement/medical/social costs for employees. Can any company sustain that in face of world competition? What about producing a 100 mpg car, a really light, gasoline/electric car? Rail travel is 3 to 5 times more efficient than road travel, should GM work to develop new techniques of rail travel, i.e. piggyback truck/automobile? But then again, GM just sold their locomotive division. What about moving production overseas? I understand they have big plans for Chinese factories. The real question is: In the face of running out of oil, is there a future for the automobile industry at all? If not, then how do you take the tremendous resources that GM has and develop an entirely new business?

Applying Mr. Kolind's techniques to change GM requires some real effort at predicting the future. The techniques themselves are good, but sometimes there are fundamental swings in the market. GM was a major supplier of locomotives, but what happened to those big, well managed companies that made steam locomotives? Could they have been changed?