Volume 2, Number 1

"When the UPS trucks stopped rolling last fall, many companies that had counted on them to move their products came to a screeching halt. Suddenly, a service crucial to transacting business was missing.

The UPS strike and the chaos that resulted provide a thumbnail sketch of what can happen when predictability both inside and outside organizations goes awry, according to HBS professor Howard Stevenson . "In their attempt to maintain the corporate status quo, top management at UPS eroded predictability for most of its workers," he says. "Many of the issues on the bargaining table -- such as a commitment from the company to assign employees a specified number of hours of work per week -- involved the strikers' need for clarity around their job. The end result was a loss of predictability for people outside the company as well."

From the first day Homo sapiens peered out of the cave and checked the horizon for danger, Stevenson observes, people have sought predictability. Organizations have evolved in part to meet this need to act purposefully toward a desired goal. "In order to survive, we have to act," he says. "We have to anticipate what's coming at us and make tough choices in real time. Eat. Don't get eaten. This has been the human condition for millennia."

Concerned that organizations are eroding their own legitimacy in their quest for short-term gains, Stevenson asserts that predictability is more essential now than ever before. "In an age of chaos," he advises, "it is essential that we both anticipate our colleagues' actions and trust their judgment."

	Clarity, consistency, and competence are the ballast that enables organizations to sail smoothly over waves of change.

In his book, Do Lunch or Be Lunch: The Power of Predictability in Creating Your Future, coauthored with Jeffrey L. Cruikshank and published by the Harvard Business School Press, Stevenson asserts that almost every aspect of organizational life can be interpreted through the lens of predictability. In fact, setting clear expectations -- and then living up to them -- is what good management is all about. "Great managers work hard at creating predictability for other people," Stevenson asserts. "The rules are clear, the goals are clear, and the penalties for violating the rules are clear. We can only act together toward a common purpose if I can predict what you are going to do and how you are going to do it. Effective organizations all have this characteristic in common."

Successful business arrangements are also based on a lack of surprise, says Stevenson, contending that two parties forming an agreement are really trying to create a reasonable level of mutual predictability. With that in mind, he offers managers some ground rules that will enable their organization to make its hopes for the future come true and enhance predictability for employees, suppliers, stockholders, and customers.

People Power "When analyzing businesses and their strategies, it's all too easy to forget the humans who make up those organizations. It's all too tempting to uncomplicate those people as we search for a 'macro' vantage point, to the extent that managers and employees cease being humans and start being 'inputs,' 'variable costs,' or --most damning of all -- 'overhead.' "But this is a little like trying to say that a snakeskin is a snake. A snakeskin is only a snake if there's a snake inside it. An organization is only an organization if there are humans inside it. If we want our human organizations to work better, we need to understand what makes people tick and find a way to give them what they need. "What they need -- what we need -- is predictability." From Do Lunch or Be Lunch

To begin with, the parties must agree on their goal and how much they are willing to compromise in order to achieve it. A second area of agreement is a shared view of what Stevenson terms "how the world works." "Suppose I'm selling you a microprocessor for use in your new line of portable computers," he writes. "Obviously, my chip has to function as part of a larger system. It has to work under a variety of circumstances over a long period of time. For these good things to occur, we have to agree on a variety of cause-and-effect relationships: if the product is used like this, then the following will happen."

Clarity, consistency, and competence, says Stevenson, are the ballast that enables organizations to sail smoothly over waves of change. Clear communication comes from building a shared vocabulary through collective experience. "If someone you trust shouts 'Duck!'" he remarks, "you want to do so without question." Organizations foster clarity, he adds, when they encourage long-term relationships by avoiding gratuitous job transfers or setting up career ladders that encourage turnover.

Being clear over and over again results in consistency. In Stevenson's view, this means the organization has a set of values from which it never wavers. "Let's call it an 'identity goal' -- the thing you won't compromise, the thing you want to be known by, and the scorecard of your consistency," he says.

Continually improving performance and keeping up with new developments is the last building block of mutual predictability. "Without competence, there is no predictability," he writes. "The world is changing, and companies and individuals have to change if they're going to be able to compete in the real world. We have to use tools that weren't available yesterday, invent new languages, agree on what they mean, and encourage ourselves and others to use them."

In a world where the concept of the global village has come true, Stevenson points out that now more than ever, our survival depends on cooperation. "I believe very passionately that the notion of mutual predictability is the basis on which we can act together," he concludes. "It enables us to build a much richer theory of organization than one that is based on the maximization of shareholder wealth."

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