Slot Machine Management
Slot machines are fascinating
mechanisms. In their most basic form, they have three rotating wheels. You pull
the handle and the wheels begin to spin. When they stop, they show a combination
of cherries, lemons, oranges, and so on. If you get three cherries in a row, or
other combinations of like fruit, you win. The slot machine phenomenon can
also apply to decision making.
You can see slot-machine
management in action in jobs that are revolving doors. If the new manager
doesn’t produce immediate results, the solution is to pull the handle and drop
another new manager into the slot. And it isn’t confined to organization change.
It can occur in development, pricing, personnel policy, market strategies—the
full range of management decision making.
On a larger scale, one of the
most visible signs of slot-machine management is seen in rapid and continual
organization change. The slot-machine manager believes there is a “winning
combination” he or she will eventually “hit. “ And if the most recent
reorganization isn’t working soon after being made, the solution is to
reorganize again (pull the handle on the slot machine).
SUBSTITUTE FOR PERFORMANCE
From one perspective,
reorganizations are exciting events. People get new jobs and the new management
is not accountable for the mistakes, strategies, or policies of the previous
group. The new organization is a stimulus for further change because the new
manager is motivated to put his or her imprint on the group’s operation.
Remember, too, that the reason for the change is usually a desire for rapid
performance improvement. While reorganization creates the illusion of progress,
if improved results are not forthcoming rapidly, the slot-machine manager
concludes the right combination has not been hit, and reorganizes again.
Every operational or
organizational change tends to produce a productivity curve that looks like
Line 1 is the state of
equilibrium that exists before the change. Line 2 is the disruption in
productivity and market response that occurs when change is introduced.
is the recovery after the change has been assimilated. Line 4 is a new and
higher level of productivity that is assumed if the change is positive, and
When management behaves like a slot machine, changes are never fully
assimilated before the next change is introduced; the change curve continues
to spiral downward.
Slot Machine Management looks like
Just when the organization
begins to recover from the last change, a new one is introduced and reverses the
recovery. Each new change has no base for measurement and comparison. And each
new change requires other changes to accommodate it. While this occurs, the
changes use up scarce time and resources.
Every so often, some combination
of changes will actually produce a sharp increase in short term productivity.
The irony is, so many changes have been introduced so rapidly and frequently, it
is impossible to determine exactly which change produced the positive effect.
Was it the most recent one? Or the one before it? Or the original change, three
or four steps ago? The odds are high that the productivity curve will fall as
the overall effects begin to act on each other.
Organizations faced with major
and frequent change lapse into a state of ambiguity in which the members simply
don’t know what to expect. Slot-machine management breeds confusion,
frustration, and anxiety to a degree that can mask even the positive changes.
People conclude that whatever they do will be obsolete by the next change, so
they lapse into doing what they’re told to do—and no more.
Slot-machine management is the
antithesis of planning. It is rationalized with pat phrases like responsiveness,
changing market conditions, and so on, but it is nothing more than expensive,
high-risk gambling. To correct the phenomenon, management must discipline
itself. It must allow enough time for feedback and measurement before making
more changes. Stable, planned decision making has important benefits:
I) It allows the organization to assimilate change and restore itself
to a new level of equilibrium.
2) It yields before-and-after results, allowing management to isolate
and judge the effects of a decision.
3) It provides valuable information (about what works and what
doesn’t), upon which the next set of decisions can draw.
4) It reduces the ambiguity and confusion about what is expected
within the organization.
5) It establishes accountability for performance.
The signs of slot-machine
management are easy to recognize: continual organization change; revolving-door
jobs; prolific product announcements without an apparent “fit” in the product
line; erratic pricing; and so on. It’s a killer.