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A Case:  Launching the New Model "Epsilon" Automobile

This case is set in the automobile industry and involves the multi-year program to re-design, engineer , and

launch for manufacturing the new model of an established automobile. The story focuses on how

leaders of this large team reinvented the management process for launching a new car model,

with dramatic improvement in results. 

This is the “Epsilon” new car design and launchproject at "AutoCo" one of the major US-based automobile producers. I use the pseudonyms "AutoCo" and "Epsilon" in compliance with the agreements of the original researchers (Roth et

al., 2000). It was a three-year OT initiative in collaboration with the former Center for

Organizational Learning at MIT (OLC). The mission of the Center was to test the ideas presented

in The Fifth Discipline (Grow theory) (Senge, 1990). Epsilon (and several other OT projects at

AutoCo) developed out of earlier presentations on systems thinking and organizational learning

given to automobile executives at this manufacturer. My sources for this case include several

interviews with the two OT leaders of Epsilon in addition to Roth and Kleiner's learning history

describing this particular effort to demonstrate a more effective way to manage product

development on a new automobile (Roth et al., 2000).

The Epsilon case is a sterling success story for the efficacy of applying learning-based

leadership, systems thinking and other methods of the Grow approach to improve the process of

managing a new car design and launch. Throughout the industry, launches were typically late,

often over budget, and always a nightmare of last-minute fixes and catch-up efforts, with a

significant portion of essential parts being late. In the last weeks many engineers would be

working all-nighters, trying frantically to fix late-appearing problems and creating new problems

for their colleagues in other areas of the car (Walton, 1997). But not this time. Epsilon’s launch

was not just on time but a week early; under budget by $30 million; and lacking the usual

pandemonium and distress. The launch was a glorious "non-event", close to an average working day!

What contributing factors should get the major credit for these results? A broad package of

organizational learning methods should probably be credited, with special credit going to the

change in behavior by the two Epsilon project leaders who worked to create a climate of more

openness to employees’ ideas, more participation in planning and problem solving, with more

emphasis on learning together and less of the blaming and bullying by senior managers, that had

previously been common (Walton, 1997). In other words, they were practicing learning-based

leadership, a core element in the Grow approach. Managers continued to set major project goals

but within those goals they now encouraged workers (mostly engineers) to take more initiative,

to be more open about their difficulties so that help could be provided earlier, and to participate

more in key design decisions, using more of their talents.

From the start of this project a "core learning team" was formed with the ten senior Epsilon

managers, two internal OD staff, and several staff from MIT (researchers/consultants), which

met every month or two for nine months. They conducted joint assessment and diagnosis on

team working issues and began learning (applying) basic tools of organizational learning.

Members of this leadership group first engaged themselves in some serious learning, before

asking the rest of the staff to learn and change. To develop the learning agenda several members

of the core learning team. interviewed other program employees about their "greatest challenges

and strengths". Later the core team used the same method to study "why are we always

late?" (i.e. behind project deadlines). Working together they created a systems map of many

factors, which led them to discovering the point of leverage. It was the fact that engineers having

a problem with their component would not report this until very late, which caused other related

work to be delayed, unnecessarily compounding the problem. Had the problem been revealed

earlier, others could have helped to speed up the solution (since most issues involved several

areas anyway) and prevented the escalation effect.

Concealing problems in one's own area was a consistent pattern. The team considered why

this happened, concluding that it was a combination of "engineering culture" (don't report any

problem until you know the solution) and a company culture in which reporting a problem

without a solution was held against you in performance appraisals, rewards, and reputation. The

Epsilon core team wanted to change that and they realized that it would require establishing trust

among the program staff that "bearing bad tidings would be safe". This required other supporting

beliefs and values, for example that cooperation for the good of the whole program was more

important than some individuals being embarrassed because their work was not going well right

now. Clearly the Epsilon team was creating a culture very different from the traditional one at

AutoCo.

These insights that opened the door to attitude and behavior change were developed first

among the core learning team, over many meetings, including a two-day off-site "learning lab".

Several similar learning labs were held for a total of one-third of the entire staff and many

briefings and discussions were held with all of them. Much of the curriculum was concerned

with communications and with changing the norms of communication. The greater openness and

honesty in work team communication allowed managers to drop much of the paperwork and

formal reporting they previously used to “control” the workforce. This produced more work

satisfaction and less stress. It was more efficient and enabled them to produce the recordbreaking

launch results.

Describing these changes several years later the Epsilon Launch Manager (number two

manager) explained as follows.

[At the start] we had a very formalistic organizational structure around the teams…

My responsibility was to control all aspects of the program. And have everyone report to

me, to tell me how they were doing and where they were going - including engineering

releases and all that… And what happened is we changed those structures… We allowed

the teams to self-organize themselves around their work. We allowed the teams to quit

doing the formalistic kind of reporting and had them actually tell us what kind of

measurables they really needed and what they needed to know. In other words, we really

let go and the natural processes evolved tremendously. And I worked very carefully with

[program manager] and the other managers to make sure that we were beginning to behave

as we were espousing. Basically, walking our talk. (Tape recorded interview August 2,

1999.)

REF.  

George Roth and Art Kleiner, CAR LAUNCH: The Human Side of Managing Change. NY: Oxford, 2000.

STAGES

A detailed analysis of this case and several other Grow initiatives (some at AutoCo and

some at other manufacturing companies), sponsored by the Organizational Learning Center at

MIT (predecessor to SoL) produced the following conclusions (Sugarman, 2001a).

(1) There is a typical sequence of stages in the life of learning-based change initiatives.

Their inception can be traced to one or a few pioneers, change enthusiasts, or "co-conspirators"

who catch and hatch the idea for a new approach, seeking out knowledge of others who have trod this path, cautiously inviting other like-minded partners, as well as a line-manager partner (who sees the need for an OT project in his/her unit and gives it a home), and as well as a senior

executive sponsor.

(2) In each case, the success of the initiative in improving a unit's performance was due to

the way executives introduced a changed approach to leadership which created a safe space for

employees to "learn together" (in place of command and control, management through fear) and

which evoked from them more of their unrecognized and underutilized talents. I am calling this

"learning-based leadership".

(3) An important role was played by a "core learning team", an alliance among several

volunteer change enthusiasts who initiated this OT. The previous point indicated how the change

leaders created a safe space for their employees; this point concerns how the leaders created a

safe space for themselves, in which to learn from the novel situations they must manage.

(4) Each of the organizational changes required significant personal change in its

participants (including leaders) themselves. Participants had to develop new skills in learning,

especially in discovering and testing their mental models, so that they could begin to modify

them, when necessary. This involved not just new skills but personal growth (“emotional

intelligence” or personal development).

(5) The success of each case in gaining the support of the parent organization for its

unconventional approach depended on the leaders of the OT initiative bringing together two

elements in their strategic goals for the initiative. This is the "bi-focal formula" where the leaders

of the initiative resolved (at least temporarily) the seemingly-conflicting demands of both short term business results and process improvement (paying off in the long term). They set short term

goals (providing business results) that lay along a path leading to improved processes and

capacity for continuous improvement. This bi-focal balancing act (between short and long-term

perspectives) is essential to the most successful cases in the Built to Last and Good to Great

studies (Collins et al.,1994); (Collins, 2001).

REFS.

Collins, 

Sugarman, B. (2001). A learning-based approach to organizational change: Some results and guidelines. Organizational Dynamics, 30(1), 6276.