Engaging people with transformation
The ever-shifting political, economic and public health landscapes result in increasing volatility for many organisations. Globalisation, digitalisation and cheap capital have lowered barriers-to-entry for more numerous competitive challenges.
Jack Welch, the transformational ex-CEO of General Electric, recognised this existential challenge when he said, "If the rate of change on the outside exceeds the rate of change on the inside, the end is near".
We explore these challenges and the steps business leaders can take to maintain a competitive edge.
The internal challenge for adapting to rapid change
Many organisations recognise they need to change, yet how they change is often based on poor assumptions. Such assumptions may have been suitable for a slower paced environment in which an organisation may have held market privilege. However, such conditions no longer stand.
For example, the classic management technique of executing strategic change through the top-down cascading of objectives will no longer cut it. Hierarchical organisational structures are often too stratified, siloed and hampered by legacy incentives for rapid reshaping and for the execution of a new strategic imperative.
Often leaders are too remote from the coalface to truly appreciate changing customer needs. This is illustrated by a Bain and Company survey which found, as long ago as 2005, that 80% of companies believed they delivered a superior experience, yet only 8% of customers agreed.
So how can leaders enable effective and continuous transformational change?
The answer, unsurprisingly, lies in involving individuals at all levels of the organisation.
That said, due to the ever-increasing clock-cycle of change, how organisations should involve individuals is contrary to the traditional top-down change-management approach.
Leaders support individuals to test assumptions
Traditional strategic transformation stems from an ideal in which a small group of know-all, see-all leaders set direction and control predefined execution steps coupled with a supposedly clear understanding of market needs. However, the pace of change introduces too much uncertainty for such a predict-and-control fixed-mindset to succeed.
Uncertainty means leaders must employ a sense-and-respond growth-mindset which recruits individuals closest to customer need. Leaders must support individuals to test strategic assumptions through rapid experimentation and customer feedback. Such an adaptive approach is valuable for both internal structural change and external market-facing change.
Leadership as grand conductors
For organisations to out-learn and out-deliver against the competition, collective learning is essential. This means not imposing ways of working, unproven solutions or unhelpful directives upon teams and individuals. Instead, leaders should ensure alignment to a common vision, and ensure teams possess the technical competency to deliver. With greater alignment and competency such teams and individuals should be afforded a greater autonomy of control.
Greater autonomy will allow teams to rapidly test strategies and seek leadership support, and for those leaders to remove the organisational impediments that hamper learning and delivery.
The Field Guide to Managing Complexity in a Time of Crisis puts it as, "Leadership needs to assume the role of a grand conductor - coordinating and creating space for local experts to make decisions for their contextual needs."
Autonomy with alignment also relates to what the author Stephen Bungay terms Directed Opportunism. Bungay describes three gaps between desired outcomes, plans and actions. The knowledge gap, alignment gap and effects gap inhibit an organisation from validating and deploying the right strategic change.
To close the gap managers often mistakenly insist on introducing even more control, creating even more information and compelling individuals to follow even more detailed instructions.
However, these gaps aren't the result of poor execution, weak alignment or the lack of information. Rather, these gaps exist because strategic change is inherently uncertain and unknown. Therefore, Bungay recommends providing teams the autonomy to test hypotheses and be nimble in exploring opportunities, hence the term Directed Opportunism.
Leaders create a safe-to-learn environment
The importance of involving people, and creating safe conditions for exploration and novelty, can be illustrated with Ron Westrum's typology of organisational cultures.
|Power oriented||Rule oriented||Performance oriented|
|Low cooperation||Modest cooperation||High cooperation|
|Messengers shot||Messengers neglected||Messengers trained|
|Responsibilities shirked||Narrow responsibilities||Risks are shared|
|Bridging discouraged||Bridging tolerated||Bridging encouraged|
|Failure leads to scapegoating||Failure leads to justice||Failure leads to inquiry|
|Novelty crushed||Novelty leads to problems||Novelty implemented|
Westrum is a sociologist who characterised organisations based on their habits around information sharing: pathological (power-oriented), bureaucratic (rule-oriented), and generative (performance-oriented).
For organisations to perform, leaders must catalyse conditions for high cooperation, where messengers (including whistle-blowers and sceptics) are heard, risks are shared, and individuals have the freedom to bridge across silos and for novelty to be implemented.
Importantly, leaders need to calibrate the rate of change so that it considers individuals’ survival and learning anxieties. The dynamic between these anxieties is described by the former MIT Sloan School of Management professor Edgar Schein, who said, “Learning only happens when survival anxiety is greater than learning anxiety.”
Often individuals feel exposed and vulnerable when they learn, particularly amongst their peers and reports. Learning, coupled with change, threatens our status and sense of control, and creates uncertainty.
Leaders need to create a space where individuals know it's safe to show vulnerability; a space where individuals feel protected to be brave in their choices to test transformational strategies and gather novel insights from customers and stakeholders. If leaders are honest and transparent with their own learning, they'll initiate the conditions for others to follow.
To respond to a world that is becoming more interconnected, faster paced and fragile, leaders need to choose carefully how they support their organisation to transform. To create effective and continuous transformational changes, leaders shouldn’t rely on ineffective traditional approaches. Instead, they should involve and support individuals to test market assumptions, act as grand conductors to coordinate those efforts, and enable this within a safe-to-learn environment.
Finally, recognising that transformational change can create discomfort and uncertainty, leaders should foster trust by sharing their own vulnerability as they themselves learn, and thus lead by example.
Referring again to Jack Welsh's quote, if you believe "the rate of change on the outside exceeds the rate of change on the inside" of your organisation, start a conversation with TEKsystems Global Services. We have a wealth of experience to turn that conversation into actionable steps; steps which will create a safe-to-learn environment for teams throughout your organisation to create success in a rapidly changing world.
Dean Latchana advises and guides leaders and organisations to gain a new set of competencies so they can continuously re-optimise to an ever-changing business landscape. He co-develops change to refashion organisations to enable continuous improvement and innovation.
As a Practice Architect at TEKsystems Global Services, Dean’s role is to support business transformation programmes and develop new ways of working across enterprises.