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Organization Development is typically thought of as part of the HR bundle of work. In my view this is a mistake – organization development is closely related to the business strategy as a strategy cannot be delivered in the most efficient and effective way without the requisite organizational capability. Organizational capability is much more than the capability of the employees to do the work – it is about deploying capable tools, systems, processes, performance measures and so on that together with the people comprise organizational capability.

Establishing an Organizational Development Center of Excellence, or consulting unit staffed by consultants qualified in both process consulting and expert consulting in a range of business disciplines allows for a whole systems approach to organization development. It does not need to be a big unit – particularly if the aim is to work collaboratively with the client on the presenting issue, opportunity, etc with the goal of transferring OD capability to him/her. But it does have to have a clear brief, support from senior business leaders, and a mandate to operate at various levels in the organization (strategic to operational, and organizational, management, group, and individual)

An internal consulting function with this brief also acts as a bridge and control point between any external consultants employed by the organization – ensuring that they are operating in consistent way considering the benefit of the whole organization. (External consultants are often employed in a piecemeal, haphazard way which is both costly and risky).

A good OD function will be able to develop an organization's capability in the following:

• Becoming customer focused: Enabling sets of people working together to produce and deliver products and services that meet customer requirements in the context of changing environments. This means helping client groups build their flexibility and adaptability to meet changing customer needs.
• Empowering autonomous units: Designing units around whole pieces of work – complete products, services or processes. The goal is to maximize interdependence within the work unit and minimize interdependence among work units. Taking this approach supports team based working that motivates staff and tends to minimize overlap and duplication. The danger here is that 'silo' thinking springs up and people lose sight of the whole picture.
• Setting and maintaining clear direction and goals: Describing for each unit a very clear purpose, defined output requirements, and agreed on performance measures. People must know where they are going, why they are going there, what they have to do to, and how you will evaluate them.
• Organizing and controlling work flows so they operate efficiently and effectively: Designing work processes so you are able to detect and control things going wrong (and right). This is a basic quality requirement implying that you provide the work unit with the information and tools to detect and prevent error before it gets anywhere down the line.
• Managing people and technology integration: Thinking of the whole system and not the individual parts. Work must link the social and technical systems. Technical systems include workflow, movement of information, work processes in discreet organizational sub-systems as well as in pan-organizational processes. The whole organization has to be able to work in concert. With this in mind, OD consultants find ways to influence change in the wider system.
• Establishing and sustaining a reliable and accessible information flow: Orchestrating the flows of information carefully. Work unit members must be able to create, receive, and transmit information as needed. Without good formal and informal flows of information up, down, and across the organization the potential for conflict and misunderstanding arises.

• Providing rich jobs: Giving people broad jobs. Parceling up the work in a way that allows increased autonomy, learning, and individual motivation. Narrow jobs stifle people's creativity and lead to boredom. Broader jobs develop people. Beware, however, of giving people large parcels without thinking carefully enough about the content. More must also be better.
• Demonstrating good people management practices: Fostering good people management practices. This means thinking through the performance appraisal processes, the reward and recognition systems, and the career development opportunities.
• Building management structures, processes, and cultures that support high performance: Achieving high performance by helping clients design open and flexible management systems where they are concerned with achieving alignment and 'good fit'. Typical high performance structures are matrix or team based.

• Ensuring capacity to reconfigure: Increasing organizational flexibility and adaptability. In an environment that is changing at an increasing pace there is advantage for those who can anticipate and respond to market forces quickly.

(Adapted from: Images of Organization, Morgan (1997)

Running a two-day organization development workshop in Shanghai last week was food for thought. I was there at the invitation of the HR Excellence Center a membership organization that provides training, development, conferences, and other information to HR professionals. (Non-members can still participate in many of the events). It is run on similar lines to the UK's Chartered Institute for Personnel and Development and the US's Society for Human Resource Management.

Thirty attendees, for the most part from large multi-national companies, participated. The food for thought came through the huge variety of questions that participants asked. (Far from being reticent – as I'd been told to expect – there was consistent interaction, involvement, interest, challenge, and engagement.)

The course was designed to cover

Definitions: What is OD?
Scope: What does OD cover?
Steps: How do you do an OD piece of work?
Toolkit: What tools help in OD practice?
Knowledge base: Where do you go for OD information?
Developing skills: How do you improve OD skills?

And as the two days proceeded a raft of questions emerged related to these topics:

One set of questions was about the position and role of Organization Development in an organization. These included:
1. Should it be a separate function i.e. not part of HR?
2. If so, how should it be set up e.g. as an internal consultancy, as a center of excellence, etc?
3. What is the role of a separate Organization Development function e.g. expert in organization assessment and intervention design or deliverer of change projects?
4. What is the scope of the work typically done in OD functions?

A second concerned the handoffs and interdependencies with other parts of the organization. These included:
1. Are OD consultants content or process experts? When do we need to involve legal, finance, HR, etc?
2. How do OD consultants interact with HR Business Partners?
3. What are the respective roles of the OD consultant and the HR Business Partner – how are role definitions agreed in order to avoid conflict.
4. What is the relationship between the business strategy and the OD work?
5. What is the relationship between a central OD function and a local (geographic) function?

A third set related to the work an OD consultant does, including:
1. Is it just change management (and what does that mean)?
2. What level in the organization are OD consultants working at e.g. strategic or operational and organizational, management, group or individual?
3. How do we get the work – from HR, by internal business development, from the strategy department, etc?
4. How do we develop skills, knowledge, expertise and an OD toolkit?
5. What are the top three skills an OD consultant needs?
6. In what phase is the consultant's work most important: assessment, planning, delivery or evaluation?
7. Can an HR generalist (or specialist) become an OD consultant?

A fourth set was concerned with developing positive perceptions of OD in the organization including managing conflicts with managers and other departments. Here questions included:

1. How do we influence a manager whose decisions/points of view we disagree with?
2. What do we need to do to be called in at the start of a business change (e.g. an acquisition, a change of focus, the introduction of a new system, etc).
3. How do we get the respect and trust we need that will enable us to get involved in helping to shape the business strategy in a way that is in line with current and projected organizational capability?
4. How do we manage conflicts that occur in the organization?

These are all excellent and timely questions. Most of the participants are working for organizations where they are just beginning to think about OD v HR in the local (China) market, and what the strengths are that each discipline can bring to successful business growth. It's a great opportunity for Chinese OD practitioners to lead the way in developing an OD profession that is soundly based in consistent theory and practice, and well respected as a necessary business skill. Over the next few days I'll discuss each of the four areas of questions.

This week I've been facilitating a training program on organization development (OD). One question that has come up repeatedly in different ways and at different times, is where should organization development consultants 'sit' in an organization? Delegates want to know whether organization development is best placed as part of an Human Resources (HR) function, part of a strategy department, as an independent unit reporting to a COO, or something else.

It's not an easy question to answer as different organizations have different views on the value of organization development and this perspective seems to color where it is 'put'. In a useful discussion "What kind of OD practitioner are you?" Fred Nickols suggests that:

Internal OD practitioners are typically found in one of three areas: as part of Training and Development; as a stand-alone OD unit; and as an Organizational Effectiveness (OE) unit. In the first two cases, the OD is typically of the "soft" variety. OE units are typically practicing "hard" OD.

By "soft" approaches Nickols means things that include coaching, motivating, mentoring, conflict management, group facilitation, and team building. By "hard" approaches he means things like business process re-engineering, total quality management, ISO 9000, six sigma, lean. He goes on to say that:

External OD practitioners fall into two groups as well: those practicing "soft" OD and those practicing "hard" OD.

It's my guess that whether internal or external, those practicing "hard" OD find more favor with senior executives and other managers focused on measurably and often tangibly improving performance, whether of people, processes or the bottom line. Moreover, I'd also guess that External OD consultants practicing "hard" OD are probably the best paid.

It's been my observation that internal OD practitioners using "soft" approaches typically find themselves in supporting roles of limited influence and, in some cases, they have been there primarily for show, so an executive can say, "Yeah, we have an OD unit." External consultants using "soft" approaches are still in vogue and on occasion work in the rarified atmosphere of the executive suite but these are few and far between.

Whether OD consultants practice "hard" or "soft" approaches depends partly on their own backgrounds, skills, experiences, and preferences and partly on what the organizational expectations of the consultant are.

Unfortunately many organizations are not clear on what OD is, why they need it, how it should be practiced, and the ROI they are expecting to get from it. Agreeing that OD:

a) Is integral to delivering the business strategy
b) Is a process for developing the capability of the whole system
c) Should be practiced by engaging and involving internal and external stakeholders through humanistic values (using soft approaches)
d) Can be evaluated and measured to ascertain ROI (using hard approaches)

helps in the discussion of where it should be based, which is as an independent, objective unit reporting into the strategy department or a COO.

The organization design model that I work with does not have 'culture' specifically visible as one of its elements (neither does Galbraith's model). The participants in the course I was facilitating last week noted this and it started a discussion on whether culture was an 'output' of various other factors, and whether culture can be changed by taking steps to change people's behavior.

One manager told the story of moving to a new role in a different department, but in the same organization. She was shocked by the different norms of behavior in the new department. Here it was the norm to swear and shout during management meetings. She noted that the manager was one of the worst offenders and in her view people followed suit.

This incident is less about changing behavior and more about role modeling – people copied what they saw as acceptable managerial behavior. The importance of leaders role modeling the behavior they'd like to see in their subordinates or in the organization as a whole is often remarked on.

Additionally there have been many studies illustrating that behavior is contagious. One that caught my eye recently Bad Behavior Contagious, Study Finds was conducted in Holland a couple of years ago,
asking the question "Does a messy neighborhood make a difference on how people act?" The answer is 'yes'.

Graffiti on the walls, trash in the street, bicycles chained to a fence, all resulted in a decline in how people behaved in a series of experiments.

A bit of litter or graffiti didn't lead to predatory crime, but actions ranging from littering to trespassing and minor stealing all increased when people saw evidence of others ignoring the rules of good behavior

In normal behavior most people try to act appropriately to the circumstances. … But some tend to avoid effort or seek ways to gain for themselves.

Things like littering an area or applying graffiti change the circumstances by indicating that others are not behaving correctly, which weakens the incentive for people to do the right thing.

So the researchers were not surprised that people littered more in messy area, for example. But, the researchers said, "We were, however, surprised by the size of the effect."

Here's an example:

The researchers found a tidy alley in a shopping area where people parked their bicycles. There was a no-littering sign on the wall.

The researchers attached flyers for a nonexistent store to the bike handlebars and observed behavior.

Under normal circumstances, 33 percent of riders littered the alley with the flyer. But after researchers defaced the alley wall with graffiti, the share of riders who littered with the flyers jumped to 69 percent.

They did a half-dozen similar experiments, all with similar results.

While the study seems to deliver a negative message, Keizer [the leade researcher] pointed out that "it also shows that municipal officials and the public can have a significant impact on the influence of norms and rules on behavior."

In other words, keep public areas neat and people will be less likely to make a mess.

Although it's not a good idea to generalize or extend from a specifically designed piece of research, just from observation it seems that people are likely to act within the norms that are apparently acceptable. People who work where there is a clean desk policy have clean desks (when the policy is reinforced) regardless of their tidiness quotient. People whose managers swear are likely to swear if that is their predilection. On this, I'm guessing that people who don't normally swear would not take it up – but I may be wrong. Some recent research on eating habits The Spread of Obesity in a Large Social Network over 32 Years found that people who ate with friends were likely to copy the eating patterns of the friends. (See also Are your friends making you fat? and Watching your Weight? Beware of Skinny Friends with Big Appetites)

This kind of behavior is also exposed in the Abilene Paradox – bylined 'the management of agreement'. Collectively these stories reinforce the notion that desired behavior should be role modeled and reinforced when it occurs. However, they are not suggesting that behavior equals culture, and it would be misleading to infer that influencing behavior results in changing the culture.

The report Retrench or Refresh puts the proposition that to stay competitive companies need to be innovative in their business model. In the final part of the report "experts explain how they feel business models need to change for survival, what leaders should focus on and what are the weaknesses in current models". What comes out of this section is more or less a list of the characteristics of a re-charged business model that is viable and successful in today's context and has features that improve competitiveness, increase efficiencies, use resources better and focuses on the customer. Characteristics include:

1. Flexibility: to evolve to business models where a) products and services are able to be paid for on an "as needed" basis, for example, in the IT world from the software license model to the software as a service (SAAS) model, b) companies can scale up or down without loss of business continuity.

2. Ability to deliver short-term cost savings and/or efficiency gains to customers: to offer customers a greater level of granularity in the way products and services can be bought, for example Ryanair's menu of options compared with British Airway's all-in single price approach.

3. Capacity to drive innovation: to engage with those interested in participation in open-innovation (looking to people outside the organization to come up with new and/or improved product and service ideas)

4. Capability to enter new markets: to look outside their traditional markets and be in a position to offer products and services tailored to customers in these new markets.

5. Collaborative ownership structures: to achieve economies of scale and reduce competitive pressures

6. Use of the digital economy: to help reinvent what the company is capable of offering and how it offers it.

(Side note: Reading through the report I noticed that the words 'sustainability' and 'environment', do not appear in it, and neither does the word 'design' – all becoming common currency in talking about business enterprises).

Standing in the way of renewing the business model are the skills of the management teams, the structures, processes, policies, and working practices that for any established company have been in place over several years i.e. the elements that comprise the design of the organization. So here lies the nub – changing the business model requires a change in the organization design.

The report does not suggest this although it does put forward a list of questions for leadership team discussion aimed at helping leaders assess whether they have a business model that is right for taking the company into a successful future.

A similar exercise was suggested by Peter Drucker. He called it "Planned Abandonment" saying that the time to abandon a product, service, policy, rule, or other organizational element is much earlier than when it begins to cause problems. As a rule it is time to abandon when any of the three following conditions apply:

1. The product, service, market, process, or whatever "still has a few good years of life"
2. Its greatest virtue is that it is fully written off. Ask instead "what is it producing?"
3. An old and declining product, service, market, process, etc is being maintained at the expense of new and growing products, services, markets, processes, etc.

He suggested that the leadership team should regularly ask a series of questions aimed at pinpointing areas for abandonment. Now seems like the right time to introduce this exercise, for organizations not doing so, as a regular (he suggested quarterly) part the business operation.

Having decided what to abandon and how to renew the business model, the next step is redesigning the organization to align with it.

The authors of the report Retrench or refresh? Do existing business models still deliver the goods? recently published by the Economist Intelligence Unit and Grant Thornton make the point that organizations expecting to survive the recession should do more than control costs. They should look at their business model and change it appropriately. Rightly, the report authors point out that the notion of a business model 'defies easy definition'. One that I've found helpful is that it is the 'what and how' of a business. "The business model of a company is a simplified representation of its business logic. It describes what a company offers its customers, how it reaches them and relates to them, through which resources, activities and partners it achieves this and finally, how it earns money". (For a more detailed discussion of this definition see Osterwalder, A. (2007). How to describe and assess your business model to compete better.

In a sense a business model is what someone seeking investor support to set up a company would describe in the business plan and in this vein the report considers a business model to comprise the value proposition, target markets, revenue-generation mechanisms, cost structure, value chain. In the authors' estimation companies should innovate in all five components of the model. Some case studies illustrate the point. For example, Vodaphone, a mobile services provider, is moving into new markets, 'transforming itself into a provider of 'unified communications' and Virgin Money (UK) is looking to becoming a high street bank

The challenges to doing this are seen to be five-fold:

1. The outlook for the next couple of years remains very gloomy and businesses hold "few illusions about growth prospects"
2. The downturn affects businesses in different ways and at different time points and this "uneven economic terrain inevitably affects how business models evolve"
3. The focus on cost cutting and control is used "as an excuse to do nothing else"
4. The capability of managers to change the business model is limited and simultaneously managers are complacent about their business models.
5. The ability to convert risks into opportunities (two aspects are discussed: the supply chain and "the spectre of climate-change regulation")

Six ways that companies are meeting (or not) these challenges to changing their business models are presented with some advice given on the focus required:

1. Heads in the sand – these companies need to stop being complacent and/or ostrich like and wake up to current market conditions.
2. Ahead of the curve – these companies are making rapid adjustments in several aspects of their business model and need to focus on good implementation of the changes
3. Fighting the last war – these companies should stop the 'salami slicing' approach to cost cutting and focus on revenue generation and growth opportunities.
4. Best before – these companies recognize that their business model has expired and need to focus on finding new revenue models.
5. Moving to the margins – these companies need to focus on how to change gear from cost cutting to margin building.
6. Hitting the panic button – these companies need to develop strategic clarity to "focus on profitable revenues, identify critical risks, and formulate appropriate responses"

While it doesn't specifically mention organization design (although in one instance – companies who need to move to the margins – re-structuring was suggested). However, it seems clear that if the business model is changed then the organization must be redesigned to support this.

The CIO's jargon busting blog has an excellent discussion of cloud computing a term that is bandied about and which came back into my conversations when I was working with a UK city council earlier this week. (We were discussing 'consumerization of IT', another phrase to go in the jargon buster). The CIOs discussion points out that:

Many of you are now realizing that you know more about cloud computing than you'd thought. If you're using a SaaS app in your enterprise, you're using "the cloud." If you run your personal life via Google tools, you're tapping into "the cloud.

In late 2008 CIO conducted a survey revealing that "despite security concerns, enterprises see real promise for flexibility and savings from the cloud."

However, according to an Economist article Cloudy with a Chance of Rain corporate customers, big and small, have not exactly rushed to embrace the new data-processing paradigm. The writer of the article suggests two reasons for this: security and adequate data destruction when a customer moves on. The 30 or so commentators on the article suggest more reasons including communication issues in dealing with off shored companies, the investment already made in hardware and the costs of changing, lack of regulation, potential service continuity issues, and lack of understanding of "the subtle nuances of the [cloud] technologies and how they are used."

In January 2010 Accenture published a report, Six Questions Executives Should Ask About Cloud Computing that helps executives towards making a cloud/no cloud decision (although as one person commenting on the Economist article pointed out "Cloud is not an all or nothing model, it's a component in the application portfolio.") The Accenture report lists six questions with answers about cloud computing:

1. What is it and how does it work?
2. What specific benefits can cloud computing bring to my organization?
3. Can I depend on clouds to save my organization money?
4. How will clouds affect the way my organization competes?
5. What risks must my organization manage?
6. What are my next steps?

• Ask hard questions and demand data-based analyses regarding cost savings.
• Establish a clear governance structure for cloud computing
• Keep cloud efforts on track
• Set the standards for success
• Provide the necessary support
• Buy cautiously appraise frequently

Some of the benefits of cloud computing that this report cites are:

Cloud computing lets companies bypass the expense and bother of buying, installing, operating, maintaining and upgrading the networks and computers found in data centers. Instead of licensing software, users tap into a service when it's needed for as long as it's needed. All that is required is a broadband Internet connection, and a phone or personal computer with a browser".

Clouds are well suited for sporadic, seasonal or temporary work, for finishing tasks at lightning speed and processing vast amounts of data, and for software development and testing
projects.

Cloud-based consumer applications like Facebook and iPhone applets are driving innovation
in unpredictable ways.

By using the speed, power and easy access of cloud applications, start-ups and established companies alike can attempt to seize first mover advantage in a new market, enter an adjacent
market or new region, and displace slower-moving, less innovative rivals.

Clouds can provide a competitive advantage so every strategist will need to understand when their current IT infrastructure becomes a competitive disadvantage.

Clouds can also help companies improve their efficiency and decision making, and make them more competitive and profitable.

For an established company which is buying and maintaining its own servers, data-storage units and network gear making the decision to go down the cloud route inevitably means changes to the design of their organization. I wonder how many are factoring this into the decision?

The phrase "good design is cheap, bad design is expensive" came up again in an organization design training course I was facilitating yesterday. One of the delegates took issue with the connotation of good design being 'cheap'. He offered an amendment to the phrase, suggesting "Good design can cost a lot. Bad design will cost a lot." Other delegates agreed with the amendment – so there it stands and the following story illustrates:

One delegate told the story of a newly designed and built elementary school, where lunches for the children were prepared on site. Some of the design faults they were contending with because architects had not consulted with stakeholders in the meal preparation process included:

• The unloading dock for produce was not close to the kitchen
• The kitchen was not close to the dining area
• The servery in the dining area where staff dished out food had not taken into account that children are shorter than adults so staff had to peer under the hot lamps to find out what selection the children wanted (rather than look at eye level over the hot lamps which would have been correct had adults been being served) – this design fault resulted in several servers getting burned.
• Staff had to wheel hot food from kitchen to servery down corridors where children were – not ideal from a health and safety perspective
• Produce deliverers could only deliver food when the children were off-site (again because of safety issues).

She described the whole situation as a 'nightmare'.

To get over this type of outcome (unfortunately very common) the tack I take in designing or redesigning organizations is to:

• Ensure there is leadership agreement on the purpose of the organization – what is it there to do?
• Ensure there is leadership agreement on the purpose of the design or redesign – what is it aiming to achieve in terms of delivery of the business strategy? (e.g. faster, better, cheaper…)
• Agree the design 'brief' for the new organization – what are the parameters in which it has to be designed?
• Map the ideal flow of the work that needs to get done to deliver the strategy within the parameters? Noting handoffs, interdependencies, decision points, etc. (Usually up to four core processes)
• 'Bundle' the work activities revealed by the mapping exercise in various combinations and test these 'bundles' against the design brief/criteria. Arriving at two or three 'bundle' options. These form the foundation for the structure.
• Determine the numbers, skills and levels of skills needed to do the work activities (i.e. determine the roles) in the various bundle options.
• Assess the costs and opportunities offered by each bundle option.
• Determine the best option.
• Convert the preferred option into a structure (organization chart) by arrange the roles in a structure that allows maximum co-ordination, autonomy, etc (depending on the design brief and desired outcomes)
• Test the new structure with 'walk-throughs' against typical day-to-day scenarios to answer the question "Does the work flow optimally through the proposed structure?"

So in my approach determining the structure (organization chart) is the last step in the designing process.

Delegates were intrigued by this as they were used the situation in which someone handed them an organization chart saying "I want my organization to look like this – please go and implement it." Within seconds people were telling other stories of faulty designs that began with the structure and resulted in very expensive workarounds to get the work flowing (less than optimally) through the structure, thus endorsing the point that bad design will cost a lot.

They saw instantly the value in a) getting stakeholders involved in the design process from the start, and b) leaving the structure (organization chart) piece to the end.

Getting the point about leading with work flow (after agreeing purpose, desired outcome, design brief, and so on) delegates went on to discuss how they could sell this approach to line managers who were blinkered to anything beyond the organization charts and moving people from one box to another.

One way that I have found effective is to discuss the risks and costs involved in a) not doing an assessment of the context for the new design b) not involving stakeholders in the work flow c) telling stories like the one above.

Standing in the checkout line in a supermarket the other day, I witnessed an interaction between two till operators. One didn't know how to complete a transaction and was asking the other for help. The second one did help but in an accusing way, calling the first employee a "silly cow" and asking why she was put on the till when she didn't know how to make a simple transaction.

A third employee stepped in and pointed out that it was an unusual type of transaction and the first employee was fairly new on the job. That whole incident set me wondering about the effect of this kind of incident on all involved.

So I was interested to read press release about a piece of research coming out in the August 2010 issue of the Journal of Consumer Research. It doesn't come to any surprising conclusion but does reinforce the point that:

"When employees are rude to one another, it creates a negative impression that affects consumer judgments of the company"

"Employee incivility was reported across a variety of industries, including restaurants, banks, government offices, gyms, retail stores, universities, airlines, and entertainment venues," the authors write. "Approximately 40 percent reported witnessing an act of employee incivility at least once per month."

Across four studies, the authors found that consumers witnessing acts of employee incivility among employees is extremely detrimental to companies. "It induces consumer anger and causes consumers to make broad and negative conclusions (generalizations) about the firm as a whole, other employees who
work there, and expectations about future encounters with the firm; conclusions that go well beyond the uncivil incident."

Surprisingly, these negative responses extended even to cases when the uncivil employee was trying to help the customer by rectifying a delay in service delivery.

The authors suggest ways for corporations to promote employee civility. "Several methods include selecting for and training in civility, setting zero-tolerance expectations, and reprimanding incivility before it festers," the authors write. "Our findings suggest one reason why training in the treatment of customers and employees enhances the bottom line-because of its impact on customer
behavior," the authors conclude. (A preprint of this article can be found at http://journals.uchicago.edu/jcr).

What doesn't appear to have been part of the study but is reported in another study is that bad behavior is contagious. In this report the authors report that:

… graffiti on the walls, trash in the street, bicycles chained to a fence, all resulted in a decline in how people behaved in a series of experiments.

A bit of litter or graffiti didn't lead to predatory crime, but actions ranging from littering to trespassing and minor stealing all increased when people saw evidence of others ignoring the rules of good behavior.

In normal behavior most people try to act appropriately to the circumstances … but some tend to avoid effort or seek ways to gain for themselves.

Things like littering an area or applying graffiti change the circumstances by indicating that others are not behaving correctly, which weakens the incentive for people to do the right thing.

Of course generalizing from two pieces of research isn't a good idea but this piece did remind me of a third piece of research I once read that people's copy the eating patterns of people they are eating with – but at this moment I can't find the article.

With all this in mind I wondered if I went back to the original shop where I'd witnessed the rude behavior of one employee to another (assuming I would go back) whether I would find:

a) more employees being rude to each other
b) an expected standard of behavior (as the third employee had tried to rectify the situation by showing empathy and trying to calm things)
c) the rude assistant still being rude – but as a single example
d) the rude assistant having been either fired for rudeness or showing different behaviors (maybe as a result of training).

Most likely in a single return visit I'd not get an answer but the policies, practices, and culture of the organization have an impact on the line that would be taken.

In the past few weeks the word 'frugality' has cropped up in connection with organizations and consumers. I wonder if it is the new buzz word and we are now going to see a crop of books on 'frugal organizations'? This could be a good author opportunity – there are many books on frugal living including 'Frugal Living for Dummies' but nothing specifically about frugal organizations that I stumbled across when interrogating amazon.com.

An article in strategy+business, March 15 2010, 'The New Consumer Frugality' reports that

A new frugality, characterized by a strong value consciousness that dictates trade-offs in price,
brand, and convenience, has become the dominant mind-set among consumers in the United States – and probably in other wealthy countries as well. Two-thirds of American shoppers are cutting coupons more frequently, buying low price over convenience, and emphasizing saving over spending. Per capita consumption expenditure has declined across demographic groups. Consumer sentiment remains weak. These trends are not going to change, no matter the pace of economic change.

Some organizations already have a mindset of frugality. Walmart is the classic example here. There's a debate on this in Business Week putting the pros and cons of Walmart's approach, and there are many tales (perhaps apocryphal of Walmart employees sharing hotel rooms, using free pens, etc that reinforce the image of very tight financial controls). Tesco has a similar attitude – for example, its headquarter building reflects caution when it comes to discretionary spend.

McKinsey Quarterly in discussing China's economy made the point that it growing it faced several challenges one of which is the consumption to GDP ratio. A related debate noted that:

Spending by Chinese households as a percentage of GDP is roughly half the US consumption ratio and remains significantly below private spending levels in Europe and Japan. And despite rising sales of items such as automobiles and household appliances, the ratio of private spending to GDP in China today has actually fallen relative to Chinese spending levels of a decade ago.

Austerity, with similar connotations, is another word being bandied about. HBR in 2004 printed an article on Funding Growth in an Age of Austerity by Gary Hamel and Gary Getz but it's one worth reading again at this point as it suggests that cutting spending on innovation is not the way to go even in frugal organizations

"Everyone knows that corporate growth–true growth, not just agglomeration–springs from innovation. And the common wisdom is that companies must spend lavishly on R&D if they are to innovate at all. But in these fiscally cautious times, where every line item of every budget in every company is under intense scrutiny, many organizations are doing just the opposite.

The pros and cons of frugality are many but and leadership attitudes to this shape organization designs. The point made by Bai Chong'en, Professor and Chair of Department of Economics, Tsinghua University, is worth leaders bearing in mind as they design and redesign their organizations:

The old consumption pattern cannot be sustained any more. The main idea now is how to create consumption for all these consumers-from China, India, and from other countries-given our resource constraints, given our environmental constraints. That's the biggest challenge to the world.

Designing frugal organizations that add value different from financial growth and conspicuous consumption may be the way to go.