Prof. Jan Ketil Arnulf
BI Norwegian Business School
Department of Leadership and Organizational Behaviour
Course at BI-Fudan MBA: Leadership Development

How can we keep necessary stability when everything is bound to change? Professor Jan Ketil Arnulf at BI Norwegian Business School asks.

The second biggest hotel chain in China is called "7 Days Inn" and advocates "free-ranging management" with a clear reference to free-ranging chicken. The initial laughter from the industry disappeared as the chain has grown to more than 130.000 rooms in 200 cities.

Founder and chairman Zheng Nanyan uses a modern Chinese proverb to remind us that organizations almost never become what the top management wants: "When the top decides a policy, the people at the bottom will find a counter-policy". The purpose of free-ranging management is precisely to leave the operations and development to the "counter-policies" from the bottom.

Free-ranging management implies that managers on low levels decide as much as possible. A network of middle managers serves to disseminate ideas, allowing useful inventions to spread without having to involve the top. Managers also have a personal innovation score that allows them to auction themselves onwards to better jobs at other places in the system. The corporate HQ has a right to veto, but Zheng says that he rarely uses the option. He says he does not want to risk his reputation arguing against the wisdom of the practitioners.

Sometimes there are mistakes: "When you raise chicken and decide to make them free range, some of them go missing, are injured or even die. If you cannot accept failure, you will never make free range management work" Zheng says.

I would like to call the example from 7 Days Inn a case of stability leadership. It is intended as a paradox. Management is supposed to be stable, leadership is dynamic. However, the old-fashioned word "change managment" is due for an update. In the case above (quoted from Qin, Li & Yu, 2015), everything is assumed to change – except for a basic financial business model that safeguards revenues, profitability, and growth. The managers must apply for their jobs every year by making a bid for hotels they hope to improve.

This is stability leadership because the HQ is concentrating only on the minimum of stability required for the company to thrive and grow. Everything else is left to spontaneous innovation bottom-up.

In this way, 7 Days Inn turned "change management" on its head. It was about time, the word was outdated and stems from a period when changes were exceptions. When change is constant, the opposite problem emerges: How can we keep necessary stability when everything is due to change?

Changing organizations has always been perceived as challenging. Usually, every third case of change attempt succeeds, another third ends up with no difference, and in the final third things get worse. Employees are frequently blamed as in concepts such as "resistance to change". Middle managers are belittled as "rockwool" (isolating the visionary top managers from the working heroes).

These days, it is hard to spot resistance and "rockwool" in real life. Instead, we seem caught by a tech fever. Change prophets are popping up everywhere spreading gospels of radical and disruptive change. Young and old alike walk around with noses stuck in some sort of app that changed their lives. While some people are probably more tech-savvy than others, most of us have gotten used to a world of continuous updates.

One German researcher told me about his headeache trying to explain the miraculous stability in Carl Zeiss, the renowned optics company. Since its foundation in 1846 it has literally been cutting edge in its industry despite of two world wars and a cold war that split the company in two from 1947 until 1991. In a world where a "Kodak-moment" is synonymous with technological collapse, Zeiss has kept re-inventing itself. The researcher found it easier to explain the changes than the stabilities.

And so the term "Stability leadership" is hereby offered. It describes an unromantic, down-to-earth attempt at explaining and grasping the core of what makes your organization special and valuable. Stability leadership is the opposite of self-indulgence and conservativism. Above all, stability leadership requires an acceptance of the fact that there is no finished "organization", only a continuous capability to organize in a changing world.

References:
Beer, M. (1994). Developing an organization capable of implementing strategy and learning. Harvard Business School Working Paper. Boston, MA.
Qin, Y., Li, B., & Yu, L. (2015). Management innovations in a Chinese hotel company: the case of 7 Days Inn. International journal of contemporary hospitality management, 27(8), 1856-1880.