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.

CHANGE CURVE  

Every operational or organizational change tends to produce a productivity curve that looks like this:

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. Line 3 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 fully integrated.

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 this:

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.

SUCCESS?

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.

REMEDIES

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.

SUMMARY  

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.