One of the wrong ways to make change is characterized by Slot Machine Management—the slot machine manager makes frequent changes similar to a compulsive gambler repeatedly pulling the arm of a slot machine hoping that that next pull will be a winner.
Change is essential for the long-term success of a business. Without change, success doesn’t happen. Yet the paradox is that the failure of management to understand change and competently manage it is high on the list of reasons businesses fail—not merely small businesses or new businesses. Well established businesses often fall victim to the lack of a corporate memory. Each generation of management tends to relearn the mistakes of prior generations. While their sheer size insulates giant corporations from disappearing altogether, they can wind up on the dustbin of wannabes—companies that are no longer in the leadership positions they once held. The culprit is often a slot machine approach. IBM is one example. There was a period of time when the company reorganized frequently—shifting managers to new rolls and specialties before they had become competent in their current assignments. They realigned their sales force every six to twelve months—changing industry assignments, making regional and division assignments, etc. Each reorganization (each pull of the one-armed bandit) rendered the company less successful and less competitive, symptoms of Slot Machine Management.
As performance goes south, the slot machine manager reacts by implementing more change to stem the fall in performance. In effect the gambler reaches up and pulls the slot machine handle with the hope that maybe this time he will hit the jackpot rather than lemons. That precipitates another fall in results and more changes by management, spiraling the company down to lower and lower results.
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