Change Management - Grief Management

In George Kohlrieser’s book “Hostage at the Table: How Leaders Can Overcome Conflict, Influence Others, and Raise Performance” (2006) the author talks about ‘change management’ from a human aspect. Most managers are familiar with various processes for managing and executing change; and many will have also heard of the ‘SARA (Shock, Anger, Rejection and Acceptance)’ dynamic of change acceptance; but if a leader wants to ‘overcome conflict, influence others, and raise performance’ a more ‘human’ understanding of reaction to change might be appropriate. In the book there is reference to the eight stages of grief: recognize and understand these and you might be able to better manage yourself and others through significant change.

Here are the eight stages of grief followed by further considerations (“et alors”):

Change Management – Grief Management

1.       Denial

Whilst experiencing grief already, people in this stage are ‘protecting’ themselves by suppressing emotion. For a limited time this can be beneficial; however it can be destructive to be in denial too long.

2.       Protest and Anger

People protest at ‘loss’ especially if there was a strong psychological attachment. Anger can become destructive – it needs to be the right anger with the right person at the right time.

3.       Sadness, Missing or Longing

The sadness is from deep inside which leads to missing or longing for what was. The act of crying is essential in completing this process; otherwise detachment and chronic loneliness can result.

4.       Fear and Anxiety

Now ‘separated’, the person feels in danger; however the crisis brings the person back to the ‘essence of who they are.’ At this point and without exception, the grief needs to be expressed and shared.

5.       Mental and Emotional Acceptance

The acceptance is in terms of both thoughts and feelings and this is often the most difficult part. Complete ‘detachment’ is not required as long as genuine acceptance of the change has occurred. 

6.       Forming New Attachments

Looking forward and focusing on the new paradigm, the new ‘attachment’ should be genuine and not just a substitute for the former paradigm (otherwise the person will remain grieving).

7.       Forgiveness

Here this means ‘being able to give again’ – being able to ‘give for’ others. Without forgiveness, the person might become either a ‘victim’ or a ‘persecutor.’

8.       Gratitude

Here, the person realizes that they are not the ‘center of the universe’ and were not the only agent of the change. ‘Reconnected,’ the person is able to become ‘thankful’.  

Et alors

Not many managers will have to deal with a change in an organization as profound as the principle causes of grief: death of or separation from a loved one; however the ‘human’ impact of significant organizational changes should not be underestimated. A major change can feel like a loss and accordingly individuals will go through the grieving process described above. If you can recognize that someone is still in ‘denial’ appropriate actions can be taken – similarly, for each of the other stages. The challenge might arise for the manager in two instances: first the manager might be ‘suffering’ grief him/herself and will have to deal with this first before being able to help others; secondly emotions (and tangible manifestations such as crying) are not always considered appropriate in certain organizational cultures. Here the manager will have to adapt (according to the prevailing culture); however holding meetings at various stages of the project where grievances can be aired will certainly help: human interactions such as empathy, understanding, dialogue and support address most of the points above.

Changing World, Changing Management

McKinsey&Company (MKC) have been publishing their “Quarterly” for 50 years and are therefore celebrating by looking to the next 50 years. In an article by Dobbs et al, (“Management Intuition for the Next 50 Years”, September 2014) they suggest that the “collision of technological disruption, rapid emerging-markets growth, and widespread aging is upending long-held assumptions that underpin strategy setting, decision making and management.” This ‘collision’ is so significant that “much of the management intuition that has served us in the past will become irrelevant…” Their research has led to some interesting analysis and insight:

·         The world saw 5 exaflops of computing capacity added in 2008, 20 in 2012 and 40 in 2014. “Global flows of data, finance, talent and trade are poised to triple in the decade ahead, from levels that already represent a massive leap forward.”

·         By 2025, MKC estimate that more than 45% of Fortune 500 companies will come from emerging markets (c.f. 5% in 2000) and nearly half the growth of global GDP between 2010 and 2025 will come from 440 cities in emerging markets (95% of which are small or medium-sized).

·         60% of the world’s population now lives in countries with fertility rates “considerably below those needed to replace each generation.” Germany estimates that in 2060 its population will have shrunk by 20% (and its working population by 28%).

Changing world, Changing Management

So what are the implications for management? MKC propose 5 focus points to address the “magnitude of the coming changes…”

Setting Strategic Direction

MKC estimate that 66% of a company’s growth is determined by momentum (i.e. the environment): to continue to capture that momentum companies will now have to be more agile just to keep up… For strategy analysis, instead of thinking of national markets broken into value ‘segments’, think of multiple offers varied by city, distribution channels and demographic segments…

Managing Technology

Technology has to be seen as a strategic issue; it is no longer “simply a budget line… it is an enabler of virtually every strategy.” Executives need to think about how specific technologies are likely to affect every part of the business and “be completely fluent in how to use data and technology.”

Managing the New Workforce

Machine intelligence needs to be used in innovative ways as soon as possible to change and reinvent work itself. Displaced workers (est. 140 million FTEs globally) will need to be retrained. Developed and emerging markets will experience issues differently – the challenge for global companies is paramount.

Rethinking Resources

Combining IT, nano-science, biology and industrial technology should yield “substantial resource-productivity increases” enabling wealth creation for economies becoming more consumer and service orientated. More ‘productive’ natural resource use is vital to support growing consumption.

Breaking Inertia

MKC research showed that “companies almost always allocated resources” on the basis of pastrather than future opportunities; however the most active companies in resource allocation achieved on average 30% higher total returns than the least active. Be forward looking!

Et alors

The world is changing fast and MKC suggest we are at an inflection point. The ‘intuition’ that current management has gleaned during the last 20-40 years is rendered redundant by the multiple changing paradigms. Is the easiest solution simply to replace the ‘old guard’ with the new generation? No – the change is too significant and too rapid for it not to be addressed immediately by ‘new’ and ‘old’ alike. So what to do? Two key words are going to determine the potential for success in the very near future: adaptability and agility. Both need to be accelerated in all areas: riding the wave of emerging market growth, seizing opportunities and mitigating threats from demographic shifts and being at the forefront of technological change!

Change Inspiration

This week I took part in a jury at a business school to assess the overall grade of participants’ “final projects”. As ever, the quality varied: from excellent to poor with a lot in between! For a business plan, besides the basics of market research and analysis, an attractive customer-offer, innovation, robust financing etc., what made a plan really “excellent” was change “leadership” rather than change “management.” Instead of just talking about how to manage a project with the focus on shareholder return, the participants delivering “excellent” plans would strike something a bit bigger: the idea of changing a paradigm, changing the way people do things, or even introducing something completely new to the world…  To achieve that, you have to have “inspiration” to change and it is not that easy to come by. So I thought to share some insights that I found in “Change Management and Reorganization” (March 2014, ICAEW)…

Here’s some thoughts from leaders to inspire change along with further considerations (“et alors”)

Change Inspiration

As a leader, when you are looking for that extra “boost” to lead a change, any of the following insights might be of interest:

A Einstein, Physicist

The world as we have created it is a process of our thinking. It cannot be changed without changing our thinking.

W Churchill, Politician

To improve is to change; to be perfect is to change often.

E Land, Polaroid Co-Founder

It’s not that we need new ideas, but we need to stop having old ideas.

GB Shaw, Author

Progress is impossible without change, and those who cannot change their minds cannot change anything.

CS Lewis, Author

It may be hard for an egg to turn into a bird: it would be a jolly sight harder for it to learn to fly while remaining an egg. We are like eggs at present. And you cannot go on indefinitely being just an ordinary, decent egg. We must be hatched or go bad.

Et alors

One could say that the only constant is change itself! And to survive or even flourish in a world that is constantly changing, you have to not only change, but change quicker than the others! Not much more to say on the subject!

From Corporate Strategy to Corporate Theory

In the corporate environment, strategy is often synonymous with “sustainable competitive advantage”. Strategic analysis is about discovering and targeting attractive markets and then forming “positions” which can be occupied and defended; however Todd Zenger points out that “equity markets are full of companies with powerful positions and sluggish stock prices.” In “What is the Theory of Your Firm?” (June 2013 HBR) he asserts that companies should focus less on competitive advantage and more on growth that continues to create value. To do so he suggests considering what is your corporate theory – a reference point to organize assets, activities and resources in order to create value.

Here’s how to move from Corporate Strategy to Corporate Theory followed by further considerations (“et alors”).

From Corporate Strategy to Corporate Theory

The “occupy and defend a position” of corporate strategy should be reconsidered by instead focusing on a corporate theory whereby there is a “rulebook” (and/or a toolkit) for creating value. A good corporate theory requires three strategic “sights” which are:

Foresight

There must be good foresight about the industry’s future. Beliefs and expectations need to be fully “articulated”, but they need to be balanced: neither too generic nor too specific; and well communicated but still a unique offer. (Think Apple 1997-2011.)

Foresight highlights domains in which to search for cross-sight.

Insight

Corporate insight is needed to identify which unique internal capabilities (rare, distinctive and valuable) can optimize the future. If competing companies own identical assets and resources and replicate or surpass your activities, then your foresight might be undermined.

Insight focuses the search for foresight and cross-sight.

Cross-sight

Cross-sight is the key to see which assets can be configured to create value. Identifying “complementarities” is necessary to create value by assembling (or buying) assets that can be combined with existing ones to create value. (Think Disney…)

Cross-sight reveals valuable complementarities, highlighting the domain of foresight.

Et alors

In the article by Zenger, two words are often repeated: consistency and coherence. This is potentially what differentiates corporate strategy from corporate theory. The theory is upstream of the strategy and if well defined should mean that your subsequent strategies are coherent and consistent. The example of Disney is cited as a success story in the article. Disney had a good theory which was coherent and consistent (the foresight of fantasy family entertainment, the insight that design and animations were their key offers and cross-sight of combinations between parks, films, tv, comics and merchandise etc..). So even though it looked like they were diversifying, they were in fact coherent and consistent with their “theory”.  Any deviation from this tends to result in less success whether that is corporate failure (e.g. AT&T) or underperforming share price due to lack of growth prospects (e.g. Walmart). To have a theory, ask how you consistently and coherently create value!

High-Performance Teams

Katzenbach and Smith in “The Wisdom of Teams: Creating the High-Performance Organisation,” (1993, McKinsey) suggest that organisational high performance can only be achieved through high-performance teams. If the organisation remains simply a collection of individuals, the organisation will never achieve its maximum potential. Their research revealed interesting insight into what makes a team a high-performance team.

Here’s what makes a team’s performance “high” followed by further implications (“et alors”).

High-Performance Teams

The authors’ research into team performance led to five “common sense” findings that made a significant difference in team performance:

A demanding performance challenge tends to create a team

- A “hunger” for performance is more important that team-building exercises.
- A team will fail to become a high-performance team without a genuine challenge.

The disciplined application of “team basics” is often overlooked.

- Team basics include size, purpose, goals, skills, approach and accountability
- High-performance requires all of the basics to be in place.

Team performance opportunities exist in all parts of the organisation

- Team basics apply to all different groups e.g. task forces, work groups, management teams.
- Despite differences, all high-performance teams share the same commonalities.

Teams at the top are the most difficult.

- Complexities, long-term challenges, and time pressure reduce senior team performance.
- Senior teams that do achieve high-performance tend to have fewer members.

Most organisations intrinsically prefer individual over group accountability.

- Job descriptions, pay, careers and performance evaluations focus on individuals
-  High-performance teams emphasise group accountability.

 

Et alors

These are the “common sense” findings about high-performance teams and indeed they do appear to be intuitive: get the basics defined, have a clear challenge and agree to be collectively accountable, then you should be on track. Leaders should take note that the authors found that “team leaders are best distinguished by their attitude and what they do not do” – focusing on team building for example is not always a route to high-performance.  Finally, one of the key “uncommon sense” findings is also worth noting here: high-performance teams “learn.” "By translating longer-term purposes into definable performance goals and then developing the skills needed to meet those goals, learning not only occurs in teams but endures…”

An Integrated Approach to Change

Change in business is often focused on the short-term with the objective of creating economic value for shareholders as quickly as possible; or sometimes focused on the long-term with the objective of patiently building the corporate culture. As 70% of change initiatives fail, the authors of “Cracking the Code of Change” (HBR, 2000) suggest that managers need to grasp the two basic theories of change and then “carefully and simultaneously balance these very different approaches.”

 

Here’s how to take an integrated approach to change followed by further considerations (“et alors”).

 

An Integrated Approach to Change

 

All changes in business can be compared along six dimensions for which theory “E” (emphasizing short-term economic value) can be balanced with theory “O” (emphasizing long-term organizational culture). Here are the six dimensions:

 

Goals

 

E:  Maximize shareholder value
O:  Develop organizational capabilities
E+O: Explicitly embrace the paradox between economic value and organizational capability

 

Leadership

 

E:  Manage change from the top down
O:  Encourage participation from the bottom up
E+O:  Set direction from the top and engage people below

 

Focus

 

E:  Emphasize structure and systems
O:  Build up corporate culture: employees’ behavior and attitudes
E+O:  Focus simultaneously on the hard (structures and systems) and the soft (corporate culture)

 

Process

 

E:  Plan and establish programs
O:  Experiment and evolve
E+O:  Plan for spontaneity

 

Reward System

 

E:  Motivate through financial incentives
O:  Motivate through commitment – use pay as fair exchange
E+O:  Use incentives to reinforce change but not to drive it

 

Use of consultants

 

E:  Consultants analyse the problems and shape solutions
O:  Consultants support management in shaping their own solutions
E+O:  Consultants are expert resources who empower employees

 

Et alors

 

As ever, it is always easier said than done! There are two things here: one is easy, one is challenging. What is easy is that the combination of the two theories is not that complicated: the key message is that change agents should not focus on just theory “E” or “O” but give due consideration to both – the combination is not so much a “new” path, but both “paths”. What is challenging is the same thing: that the combination of the two theories is very difficult! This is the very essence of the theory (under goals) that there is a paradox between the short-term economics and the long-term capabilities of the organizations. Day-to-day demands often distract the manager from the longer-term perspective; whilst long-term organizational strategies often appear to be in conflict with short-term economics. Achieving “integrated” change requires acceptance of this tension and promoting it (i.e. including both change theories) and then carefully managing that tension!

 

 

Business Model Generation

It is unlikely that the competitive advantage of any business will last forever. Accordingly, you need to know exactly how your business is positioned and how it fits with the context and environment. In order to facilitate such a regular strategic review, there is a very good business model “generator” which has been developed through collaborative efforts and published in a book called “Business Model Generation” by Alexander Osterwalder and Yves Pigneur (John Wiley & Sons, 2010). It gives a brilliantly concise overview of a business so that you can build your own model to see where and how you are adding value; and in so doing consider where you might need to best focus your efforts, both now and in the future.

Here’s the business model generator along with further considerations below (“et alors”)

Business Model Generation

As illustrated below, the pro-forma is in 9 parts surrounding the key “value proposition”. On the right is the customer whose interface with the value proposition is the “customer relationships” and the “channels”. These are related to the revenue streams. On the left are the “key partners” who are connected to the value proposition through “key activities” and “key resources”. These are related to the cost structure.

Key Partners	Key Activities	Value Proposition		Customer Relationships	Customer Segments
	Key Resources			Channels
Cost Structure			Revenue Streams

Here’s the various sections in detail:

Value proposition

This is why customers come to you. Create value by inventing something new; improve your product’s “performance”; or “differentiate” your offer to specific needs.

Customer segments

This is all about positioning. “Mass” markets and “niche” markets require different approaches, while “segmented” customer bases share similarities, but with differing needs.

Channels

Select the best “customer touch points” to communicate value and to distribute and sell your products and services. What is the channel e.g. internet, B2B2C, B2G, wholesale…?

Customer relationships

Establish different ways to serve distinct market segments: is the focus on mass produced commodities or on personalized service?

Revenue streams

Capturing income, each type of revenue stream may demand a different “pricing mechanism,” either a “fixed” price or a “dynamic,” negotiated price.

Key partnerships

Consider supplier links, “coopetition”, joint ventures and “strategic alliances”; along with outsourcing and subcontracting.

Key resources

Assets are “physical, financial, intellectual or human” depending on what the business is. Remember that key resources may be “owned or leased”.

Key activities

What do you actually do to capture the profit? Produce an item, provide services/solutions, manage processes?

Cost structure

“Cost-driven” or “value-driven”?  Outlays represent “fixed and variable” expenses. Consider economies of scale and “scope” from large-scale production and distribution.

Et alors

The idea is that using this template you can see where your business model adds value and also where it might not add value. Such a review applied to a private banking business might (for example) highlight that customer relationships are the most “value added” part of the value proposition which therefore need to be focused on; whereas operations could be outsourced.

The model can also be used to compare your business to that of competitors to see where there might be an opportunity or a threat. It might also assist a review of the possible temporary nature of your current “value-add”. This might highlight other parts of your business that could add value in future or even right now (eg. UPS with their offer to manage other companies’ logistics).

The key is as the authors say “virtually all business models eventually become obsolete, so proactive companies actively conceive and pursue new models. One side benefit of continual business-model design and redesign is a healthy lack of respect for long-held assumptions.” Each of the 9 sections of your business model is subject to continual repair and renewal! Keep reviewing!

Dealing with Change

When leading changes it is important to know how those changes will affect others in terms of performance. The “change curve” is one of the best models which can be used to predict how performance is likely to be affected by the announcement and implementation of significant changes. The model was originally developed by E. Kubler-Ross in the 1960s to explain the grieving process for terminally-ill patients. It has been subsequently updated to consider the key stages that anyone would progress through when dealing with upheaval or any significant change. Knowing the “change curve” can help leaders to adapt their interactions according to where people are in their “progress” with the aim of achieving the proposed changes as effectively as possible. 

Here’s the change curve along with further considerations (“et alors”). 

Dealing with Change 

There are five distinct transitional stages of emotion when dealing with significant change: 

1. Shock 

The initial shock can result in a sharp dip in performance. Usually exacerbated by “fear of the unknown” the shock usually leads to the change being questioned. 

Leaders need to explain the change with as much information as possible while being supportive. 

2. Anger 

The anger is usually with someone or something which has to be blamed! Frustration and skepticism can often lead to depression with the onset of a sense of “loss”. 

Leaders need to reassure individuals usually through collective empathy (“we’re all in it together”). 

3. Rejection

The change is completely rejected leading to a nadir of performance often compounded with the continuation of behaviours and tasks that are no longer necessary. 

Leaders need to continually and positively market the change focusing on benefits to all involved. 

4. Acceptance

The individual begins to work with rather than against the change. A sense of relief might even give way to excitement or impatience for the change to be complete. Performance increases.

To ensure that individuals do not revert to prior stages, leaders should not stop communicating.

5. Hope

The focus is now on the future with a sense that real progress can be made. The changed situation has now replaced the original situation as the new reality and performance improves markedly. Leaders should capitalize on the momentum and even explore further opportunities.

Et alors

Whilst the “S.A.R.A.H” acronym is a useful way of remembering not only the stages but the common order of the changes, leaders should note that there is no right or wrong sequence. Similarly, some individuals will spend more or less time in one stage and will therefore reach different stages at different times. This highlights that, as is often the case, the art of leadership is all about connecting individually on a “human” level. Changes cannot just be rationalized – people are behind the changes and accordingly there will be feelings and emotions to deal with. Performance is affected by engaging individuals emotionally – and the leader’s logical questions should be supplemented with enquiries as to how people feel. Further, each individual is different: using the “change curve” to deal with change highlights that leadership can be most effective when it is performed on a one-to-one (rather than one-to-many) basis.

Leading Change

In a report by the Conference Board think-tank, “Strategic Leadership Development: Global Trends and Approaches”, in excess of 650 HR professionals were asked in 2012 what are the most important leadership characteristics 1) ranking most important now; 2) which are developed in leadership programs; and 3) which are the most important over the next five years. The number one answer to all those three questions was “leading change”. Unequivocally, across regions, nationalities, cultures and industries, leading change is the most important. So how do you lead change? One of the best tools for leaders to reference is Berenschot’s “Seven Forces Model” (1991). Here’s how to lead change followed by further considerations (“et alors”).

 

Leading Change

Unlike Kotter’s eight steps model (1990) which focuses on why and how changes can fail, Berenschot’s change model focuses on the forces which make change happen.  Of the seven, the first three are “stories” which the leader communicates, the fourth is the “fuel” that the leader provides for the other forces and the last three are the “actions” that the leader needs to initiate.

Necessity

This usually has to be a shock to break the inertia and to create a sense of urgency.

Necessity “moves” and usually sparks a sense of “being in this together”.

Vision

The leader envisions the changes for other to see what is requested of them.

Vision “directs” by inspiring others and creating a sense of purpose.

Success

To convince followers there must be early proof to confirm that the change is possible.

Success “makes believe” that the new way is better.

Spirit

The leader’s strength to not only initiate but maintain a high level of engagement.

Spirit is how the leader “gives power” to the other forces.

Structure

Structural support at organizational level to challenge people and to endorse changes.

Structures “challenge” the current way of working and then support the proposed change.

Capabilities

Knowledge, skills and empowerment to achieve the new tasks.

Capabilities “make possible” the changes by providing the necessary resources.

Systems

Information, reviews and feedback to confirm the desired performance (skills and behaviours).

Systems “reinforce” the change both during the implementation and after.

Et alors

Leading change takes a lot of energy and a lot of force! One can consider that there are four initial responses to a proposed change: 1/ Resistant – will pro-actively block the change; 2/ Neutral – either for or against the change but will not actively participate in the change process; 3/ Reluctant – for the change but will actively avoid participation in the change process; and 4/ Positive – for the change and will proactively support the change effort. Only the last one out of those four positions will provide their own positive “force” to the change and that is after the leader has highlighted the necessity, communicated the vision and even demonstrated some early proofs! This is why the leader needs “spirit” to bring (at least) those who are ‘reluctant’ and ‘neutral’ “on board” and then go the extra mile to effect the “actions”. To be capable of leading change, you therefore need to align your passion, your talent and the opportunity!

Leading by Networking

Talking to Mike Barry, of the D-School at Stanford University this week, we reflected on what a leader needs to make innovation happen in a large organization. In summary, the keyword was networking: both to receive information so as to assess what “can” be done (rather than what might be done); and then to influence others to make changes happen even when faced with uncertainty. Taking this further I wondered what type of network might be best for a leader to effect innovation and/or make changes. According to Battilana et al., “it depends”, but in their HBR article the authors give clear guidance as to what network types can improve the leader’s chance of innovating: “The Network Secrets of Great Change Agents” (July 2013).

Here’s how to lead by networking along with further implications (“et alors”):

Leading by Networking

The authors focused their research on finding effective change agents in large organizations and then mapping their success to the type and nature of the network they had. The predictors of the change agents’ success were the following:

Central

Change agents who are central in their organization’s informal network “have a clear advantage”, regardless of their position in the formal hierarchy.

Review your network. If you are not central (like a “hub” with many “spokes” spanning 360°), either develop your network and/or engage someone who is in order to achieve the change.

Bridge (for Dramatic Changes)

When the person’s network contacts are not connected to each other, the person makes the bridge between disparate individuals and groups. This proves best for making “dramatic” changes.

If you are proposing divergent change which disrupts existing practices then make sure your network is a “bridging” type or “appoint a co-chair whose relationships offer a better fit”.

Cohesion (for Minor Changes)

When the person’s network is cohesive (i.e. contacts are also connected to each other), the ease of facilitating communication and building trust proves ideal for making “minor” changes.

Once the change proposal is “out”, a cohesive network either tends to fully cooperate or to form a coalition against the change; hence the suitability for minor rather than dramatic changes.

Closeness to other influencers

Defining closeness in terms of “mutual trust, liking and a sense of social obligation”, being close to “change endorsers” proved to have no impact on the success of either dramatic or minor changes; but being close to “fence-sitters” had high impact on the success of either type of change.

Being close to “change resistors” impacted success for minor changes; however closeness had no impact on the success of dramatic changes (since when resistors perceive a significant threat they are typically difficult to influence otherwise).

Et alors

So it really does depend! Innovation comes in many shapes and forms from incremental adaptive changes to large and singular disruptions. These changes can be best managed according to the type of network the leader has; however if we change the frame of reference from “network” to “ecosystem” then the position of the leader in the “ecosystem” is by no means leader-centric! The leader is part of a larger ecosystem and will accordingly have to adapt to the environment which might be impacted by the local culture (national or organizational). Some cultures might be collegiate and group-orientated whereas others might be competitive and individual-focused. The former might lend itself to “cohesive” networks; the latter to “bridging” networks. Therefore in turn, and despite the best efforts of the leader, in collegiate and group-orientated cultures, innovation and change might only occur on an incremental, gradual and “minor” basis; whereas in competitive and individual-focused cultures, innovation and change might happen more often as large and singular disruptions!

How Leaders Accelerate Change

John Kotter, the Konosuke Matsushita Professor of Leadership, Emeritus at Harvard Business School and author of 17 books including the seminal “leading change” has just published a new article on change management which is likely to become something leaders will refer back to for years to come: “Accelerate!” HBR, November 2012. In it he not only draws on his own “leading change” material but also that of Porter, Christensen and Kahneman to propose a solution to the dilemma that companies today “must constantly seek competitive advantage without disrupting daily operations”.

His theory is that traditional hierarchies and managerial processes are very good at addressing the daily demands of running a company; however “what they do not do well is identify the most important hazards and opportunities early enough, formulate creative strategic initiatives nimbly enough, and implement them fast enough”. He therefore proposes that two systems should operate in concert: one the “rational” hierarchy; the other a “more emotional” network. The latter is based on his eight-step change method but importantly, in the network, the steps become “accelerators”.

The network ensures that the accelerators are current and always at work (rather than being used in a rigid and sequential way); and instead of change being driven by one small powerful group, the accelerators “pull in as many people as possible from throughout the organisation to form a ‘volunteer army’”. This network approach overcomes the two principal change resistors found in a hierarchy: 1/ political: managers being “loath to take chances without permission from their superiors”; and 2/ cultural: people “cling to their habits and fear loss of power and stature.”

Here’s how to accelerate change along with further implications (“et alors”):

How Leaders Accelerate Change

According to Kotter, “mounting complexity and rapid change create strategic challenges that even a souped-up hierarchy can’t handle. That’s why the dual operating system – a management-driven hierarchy working in concert with a strategic network – works so remarkably well”. The dual operating system has five principles:

Many change agents, not just a few

To move “faster and further, you need to pull more people than ever into the strategic change game”, but in a way that is economically feasible. 10% of managers and employees at any one time is proposed by Kotter as both “plenty and possible”.

A “want-to” not just a “have-to” mindset

To mobilise a “voluntary army” people have to want to be change agents and must be given permission to do so. The spirit of volunteerism (the desire to work with others for a “shared purpose”) “energises” the network.

Head and heart, not just head

In order to engage management and staff in the change network, you must “speak to their genuine desire to contribute to positive change and to take an enterprise in strategically smart ways into a better future, giving greater meaning and purpose to their work.”

More leadership, not just more management

The hierarchy needs competent management; the strategy network needs lots of leadership. It’s “all about vision, opportunity, agility, inspired action, and celebration – not project management, budget reviews, reporting relationships, compensation and accountability to a plan.”

Two systems, one organisation

The dual operating system is not two silos: “the network and the hierarchy must be inseparable with a constant flow of information and activity between them – an approach that works in part because the volunteers in the network all work within the hierarchy.”

Et alors?

It is quite possible that this “win-win” solution will become the defining hallmark of corporate strategic change initiatives from now on! Its simplicity is beguiling and it solves the ultimate change-management question: how to effect change without having to change the hierarchy itself! However, the idea of a hierarchy being staffed by managers whilst simultaneously super-motivated and highly-engaged leaders form volunteer armies with a sense of purpose to effect change highlights one key point which should not be overlooked: at least someone in the hierarchy (very near the top) must have sufficient leadership (and management) capabilities to introduce, promote and sponsor such a change-network! Without that initial “birth” of the network from the hierarchy, the hierarchy is at risk at remaining just that!

From a Human Resources point of view, what Kotter is proposing might be the new, modern and collective version of the now old-fashioned concept of individual “garage-time”? Hitherto, in an attempt to foster innovation, many companies permitted employees to spend 10-20% of their work time on individual projects on the understanding that any resulting innovations would become the property of the company. 3M had its famous “post-it” product succeed in such a way, but that is now an old story. Google recently revitalised the idea and coined the term “garage time” but insiders insist that it is no longer a genuine offer and publically the corporation no longer promotes it. When it was fashionable, it was billed as a key offer to attract, motivate and retain staff. Now perhaps organisations should offer collective “change time” for those willing to work together on strategic change initiatives?

Staying with HR, from a learning and development point of view, this is both a fantastic opportunity and a reflection of what already happens in many large organisations. As part of a leadership development course, many corporate universities offer “action-learning” projects which in a way work exactly like Kotter’s proposed “volunteer armies” not necessarily effecting change but at least studying and proposing change under the tutelage of a senior sponsor. Not only do the diverse leaders from all parts of the organisation come together and work in a team getting to learn about the challenges of change management and developing as leaders; but also, if the proposed projects are strategic in nature then the organisation itself can gain fast insight into the changes that are needed to maintain a competitive advantage without disrupting daily operations!

Leadership and Buy-in

Many authors have associated leadership with making changes, but no leader can effect a change without having first “sold” their idea to the key stakeholders. The doyen of change management and leadership, JP Kotter, has argued that a lack of communication before, during and after the change is a common theme in the failure of change management projects. Focusing on the communication both before and during the change, he recently published a book with LA Whitehead entitled “Buy-in: saving your good idea from getting shot down” (Harvard Business Review Press, 2010).

Here’s a summary of how leaders ensure “buy-in” followed by further implications (et alors?)

Leadership and Buy-in

Instead of Q&A, the authors speak of A&R: “Attacks” that any idea for change is likely to encounter along with generic “Responses”. Twelve proposed A&R can be categorised as follows:

Problem Denial

A – We’ve been successful so far so why change?
R – Success is temporary and to succeed further we must adapt.

A – You imply that we have been failing!
R – No, we suggest we have been doing a good job within the current limitations.

Solution Denial

A – What about this, and that, and this, and that…?
R – All good new ideas eventually raise questions which cannot be answered.

A – You are abandoning our core values!
R – The plan and the accompanying change actually uphold our core values!

A – No one else does this!
R – Do your homework or prove that you are the very first!

A – We tried it before and it did not work.
R – That was then. Conditions and context have now changed.

Implementation Denial

A – Good idea, but this is not the right time.
R – The best time is now and this is urgent, because…

A – It’s just too much work to do this!
R – A real challenge is a good challenge and this is a priority because…

A – It won’t work here; we’re different.
R – Relative to this particular problem and solution, we are similar because…

A – It puts us on a slippery slope to disaster.
R – This change will not lead to disaster in any form because…

A – You’ll never convince enough people.
R – That’s almost never possible; but I would like you to be convinced because…

A – We are simply not equipped to do this.
R – We already have much of what we need and we can get the rest because…

Et alors?

Some readers might liken the above generic responses to Schopenhauer’s “The art of being right: 38 ways to win an argument”, however, here, it is meant to be a sales technique to ensure buy-in rather than anything more intellectual, manipulative or even Machiavellian. Indeed, the real key to success is to have done your homework before making your pitch. What is interesting in the above categorisation is that the “implementation denials” really have to be supported with specific facts in addition to the generic response. It is also interesting to note that it might be better to spend more time on the solution than the problem and more time again on the implementation plan!

It should however be noted that the “buy-in” is only half the journey. Once sold, the change project actually has to be achieved (and continually communicated). In organisations with very strong and formal hierarchies, the “effecting change” part of the equation can often be overlooked! The “buy-in” is key and once approved by the “top,” the change implementation is sometimes neglected on the false premise that since it carries the badge of most-senior approval it can be implemented by simple “command”. Worse, when this approach becomes part of the corporate culture, too much time can be spent doing homework and getting everything impeccably correct before approval is sought. That can kill innovation and slow down the organisation’s adaption with the changing environment: ultimately, it can impede the competitive advantage of the organisation.  

With competition amongst many ideas, lots of initiatives and a pragmatic perspective on innovation (ie try-and-see), it is likely that some American leaders might need to be better prepared to achieve a “buy-in” of their idea within a corporate culture typically seen in the USA. Hence this (American) book! On the other hand, whilst this guide might be useful for leaders in all corporate cultures working in any part of the world, another problem arises where corporate cultures are very formal and very hierarchical (such as can be found in Europe), namely that too much time is spent on the “buy-in” and nothing else! The pitch has to be good and it has to be well supported with solid facts; but in such cultures, perhaps the onus is on the buyers as much as the sellers to get the “buy-in” just right within the dynamic of the changing environment…