The beginning of “Change, How Organisations Achieve Hard-to-Imagine Results in Uncertain and Volatile Times” sets the scene.
Disruptive change
Disruptive change is the central force shaping the challenges that organisations and people face nowadays. Neither human nature, nor the most common form of the modern organisation, are designed to handle anything close to this degree of change. As a result, there is a growing gap between the rate, amount, and complexity of change outside organisations and the ability of the hardwired enterprise and our human capacity to keep up. Organisations designed fundamentally for a slower-moving, and a more predictable world both struggle or at least miss the big opportunities. Read “Thank you for being late“.
Recognise this
A hand-picked group of a dozen executives, many from HR, had a series of meetings and did some top-level interviews to clarify what culture they believed was needed. The output from these meetings went to the executive committee for their approval. With minor tweaks, approval was given. These groups drew up plans for “cascading” the information down the hierarchy and “educating” management about the new culture. This approach focuses on telling and not on showing, on talking and not on action, on having to instead of wanting to.
Companies don’t last long
That is why the average tenure of companies on the S&P 500 is half of what it was in 1965. In 1965 it was 33 years. The clock is ticking. The gap between what is needed and what most organisations are capable of continues to widen. It is the end of management centric or command-and-control organisations. The default setting of an organisation is still filled with rules, policies, procedures, plans, and a drive toward standardisation—all essential for efficiency and reliability are all potential barriers to change.
Collective leadership
A few enterprises have become adept at facing these challenges by identifying trends early, changing quickly, and successfully manoeuvring at speeds that feel like 100 miles per hour. The most successful change comes from mobilising more leadership from many more people.
Two channels
We have reached a point where our very understanding of change is changing. It is straightforward. We, humans, are hardwired with two principle channels. A survive channel, and a thrive channel. Those are the two tracks you need to implement in your organisation. The way to create enough smart change at a fast enough speed is to prevent the survive channel from overheating and activate the thrive channel across a sufficient number of people. What needs to be avoided at all costs is that the survive channel overwhelms the thrive channel, and creativity (and any focus on handling a difficult situation faster, smarter, and more efficiently) ceases.
Survive channel
The survive channel is the biological equivalent of a radar system that is constantly on the lookout. When our brain detects what is perceived as a danger, a lightning-quick, subconscious sequence of actions occurs. The survive channel is a very powerful part of our nature. It is undoubtedly central to the fact that humanity has not been wiped out over the last hundred thousand years, unlike millions of other species. Today, when we are not successful at eliminating some problem, typically because the threats are hugely complex and there is no practical way to avoid or stop them quickly, we can end up in a heightened survival state for a considerable period of time.
Thrive channel
The thrive channel also has a radar system, but it seeks opportunities instead of looking for threats. Thrive is accompanied by emotions like passion and excitement rather than anxiety or anger. As long as we see evidence that we are making some progress, our increased energy can be sustained for a remarkably long period of time without feeling burned out. Thrive can be activated through the visibility of inspiring opportunities and the willingness, support, and ability to pursue those opportunities. Thrive-activating behaviour is grounded in understanding human nature, modern organisations, and leading change. It mobilises people to produce outstanding results despite all the barriers.
Maintaining the founders’ mentality
Young firms do not operate with rigid formal hierarchies. They operate more like loosely knit networks, without a great deal of management. The strength of the system is its capacity to adapt, move quickly, innovate, and in general, change with evolving knowledge and requirements. In all successful organisations, there is a period when both systems are operating together—a dual system—each focused on different goals. The original entrepreneurial/leadership network tends to activate thrive and to drive innovation, speed, adaptability, and change. The new hierarchy connects more with our survive side and drives efficiency, problem-solving, reliability, and stability.
Dual systems
In the most successful enterprises, the authors studied, the two systems work for a while in tandem with a variety of mechanisms mediating natural conflict. You will need a “dual system” of sorts that focuses on management processes to achieve reliable, consistent performance and on the leadership behaviours and participation from many required to unleash innovation and effective change generally. A dual system makes short-term efficiency and reliability and longer-term agility and innovation sustainable. Where network-like task forces are added to drive initiatives, survival was secure. When the dual system becomes just a part of “how we do things here”—that is, as it sinks into the culture—you get sustainable agility.
Hearts and minds
Without sufficient communication of a rational and emotionally compelling case for change, it is nearly impossible to achieve buy-in that inspires and mobilises the action required to drive and sustain difficult changes. Most successful large-scale change efforts start with a clearly articulated, compelling, and emotionally inspiring opportunity. Winning over hearts and minds with strategy and passion. Toward using have to and want to.
What is possible today that was not possible yesterday?
The core is all about new actions, better outcomes, and achievements recognised, communicated, and celebrated. More action, more results, recognition, communication, and celebration—all framed within the context of the biggest opportunities in front of the newly merged organisation. Often within the context of the question “What is possible today that was not possible yesterday?”, involving and engaging the diverse many in sales in helping with integration initiatives alongside a deliberate focus on culture.
Guiding coalition
The nerve centre of the dual system is a “guiding coalition,” a core team that coordinates the activities of the network and ensures integration with the hierarchy. The GCs had a tenure of one year and each year’s group incorporated the learnings from previous years. Top executives participated in the event, providing their perspective about the state of the business and even pitching ideas (which the GCs would be free to choose from or not).
The problems
- Small elite groups have neither the time nor the information to make the best decisions in any of the steps in the process.
- Once the survive channel is activated, management noise, rumours and water cooler conversations can overwhelm messages.
- The recovery of trust, attention, positive morale, and individual productivity comes far too slowly.
What to do
- Create a broadly embraced sense of urgency around opportunity.
- Communicate widely and get people to buy into the concept of capitalising on the opportunity.
- Mobilise many to take aligned action
- Maintain urgency and energy until work on initiatives is successfully completed.
- Reinforce (and sustain) the momentum until the work is successful.
- Behave according to a set of guiding principles.
- Hold people accountable to have-to tasks.
- Win over hearts to get true buy-in, energised volunteerism, and that want-to positive attitude.
- Be good at management, and they develop and promote excellence in planning, organising, and controlling.
- Encourage and support leadership from many people. Leadership as a mindset.
- Empower the employee base to act
- Use small, highly select groups to attack certain change tasks.
- Create diverse teams, leveraging both subject matter experts and energised volunteers from across different parts and layers of the organisation.
- Combine formal hierarchy with fluid networks. Hierarchy and controls are central mechanisms to executing operating plans. Networks and leadership from the diverse many are at the core of driving strategic initiatives.
- Identify and celebrate successes, even small ones, and broadly communicate them.
- Provide the leadership that would empower others to lead. Secure based leadership.
- Align the leadership around a compelling description of a big opportunity for the firm.
- Take stock. Do a radical collective review of the entire business operations. From the organisational structure and processes; to the relationship with customers; to the way information flows through the organisation.
- Be consistent
- Be transparent
- Create a volunteer army
- Let people work on projects that they are passionate about.
- Developed a compelling articulation of what opportunities might be realised. Product an opportunity statement
- Be transparent and honest about why decisions are being made, the timelines, and most importantly, the process being followed.
- Demonstrate empathy.
- Create a change committee (with elected members) and let them drive the process (leadership reports into those committees too).
- Lead by example.
- Identify survive-activating triggers, including management processes, metrics, and expectations.
- Ensure belief among employees in the organisation’s purpose and management capability.
The problem is strategic planning
Most strategic planning violate all known leading change principles: employing a group of drivers that is too small and homogeneous; epitomising a 90% head and 10% heart, have-to without much want-to process; and too often focusing on crises or problems and not opportunities. Most of all, strategic planning is very much a management-centric activity, not a leadership-centric activity.
The problem is the executive team
Trying to run everything through a very busy and relatively small executive team inevitably leads to decisions being made too slowly, especially in a more rapidly moving world. When large-scale change is successful, especially in a swiftly changing world, significant numbers of unknown people sometimes become especially important. These diverse groups are closer to products, customers, technology, or internal processes. The notion that it is all about the top executives fits comfortably within the logic of the modern managerial-centric organisation but does not necessarily lead to successful strategy formulation or implementation in a rapidly changing context that demands leadership.
The problem is engagement
You need diverse masses dedicated to helping you lead change. That means people from all the relevant departments and staff from the top to the bottom of the organisation. Without a significant group of engaged bodies and brains, without large numbers of alert eyeballs (and activated opportunity-seeking radars), it simply is not possible to see all the most relevant changes happening in the product marketplace. Without enough sufficiently engaged people actually providing some leadership, it is not possible to overcome all the barriers to strategic change inside modern organisations in a timely manner.
The problem is data
The standard strategy model assumes that you can get a sufficient amount of the right data for making projections considerably into the future. One substantial study of nearly 100 big change initiatives, among the 20 judged to be most successful, the number where data and analysis—versus experiences and feelings—were the key to success was zero. Read “Sensemaking” or “Unchartered“.
The problem is credibility
The group charged with creating broad engagement must have credibility in the eyes of the employees. This group will generally need to include top management as well as a diverse team from all departments, levels, and geographic regions.
The problem is timing
The one-and-done nature of traditional strategy is dictated by the calendar. Once a year at most. It needs to be a constant process. Like a change muscle.
The problem is top-down
Modern organisations have a built-in tendency to “cascade” plans down through the hierarchy, a process that cannot begin to activate Thrive.
The problem is zoning
Different systems are needed because they serve different purposes: reliability, efficiency, standardisation, and stability for management; innovation, mobilisation, adaptation, and change for leadership. Read “Zone to win“.
The problem is culture
A way that enterprises try to cope with a more rapidly changing world is by attempting to consciously mould their “cultures. However, culture is generally treated as “soft”. People often have great difficulty describing their own cultures or agreeing on what their cultures are. Cultural attributes are passed down informally and not through any intentional process. Cultures tend to be remarkably stable and to change very slowly. If you need it, it is too late.
The problem is short term thinking
First, focusing so much on the short-term makes it more difficult in general for any enterprise trying to actually change its culture. Second, by focusing top management’s eyes on stockholders, firms all too often do not have enough people paying enough attention to and then acting swiftly on changes in the product/service marketplace. With the growing activist nature of both employees and customers, this is becoming an increasingly untenable position. We have nearly 50 years of evidence that shows some of the negative consequences of a shareholder maximisation paradigm in a time of increasingly rapid change.
The problem is social capital
Corporate change efforts can also benefit from studying the tactics used by successful social movements to create engagement and participation. When enough people from enough places start providing some leadership around a shared sense of an opportunity to make their world better and do so with a positive emotional set, you have the beginnings of a social movement. Social capital as a business tool.
The problem with mergers and acquisitions
Often, M&A is driven by a simple economic evaluation. Even more often these days, time is the issue. M&A is usually followed by a new strategy, involves some restructuring and digital transformation, and always requires cultural integration. The non-success percentages range from 50 to 70% (not unlike some figures thrown around for strategy failures or restructuring disappointments). One study reported in Harvard Business Review in 2011 put the failure rate even higher, somewhere between 70 and 90%.
Reasons for M&A failure
In the first, the focus is driven by a checklist of integration tasks and a process similar to typical strategy and restructuring work today. To speed up what can take a long time and to keep people from “worrying” or organising to fight decisions, little is communicated about what employees should expect in terms of timelines, implications for various roles, and the like. Of course, all this inadvertently overheats survive in too many people.
It is all about leadership
Too often, “leadership” and “management” are still thought of as positional. Leadership is about establishing a direction and vision for the future, aligning people around that vision, and motivating and inspiring them to take action. They create an environment that allows for and promotes leadership from everywhere. They add an organic, dynamic network structure—sitting alongside the traditional hierarchy.
The book in two sentences
Operate not just through formal hierarchy and management but also through more informal networks and leadership. Manage both thrive and survive.
