Thursday, February 29, 2024

Change Management is strategy and vice versa

 I was reviewing the website of a strategy consulting firm recently, and their focus on strategy and team alignment felt like the same old, same old.  I read further to discover that they focus on passion and mission (hello Simon Sinek).  But what struck me about their work is that they also focus on culture and change management.  These latter two concepts were the things that got my attention.

In a time when everyone is focused on analytics, on artificial intelligence, on strategy and on mission, focusing on change and culture is almost counterintuitive, but it's probably what we should be focusing on.  When others zig, it may be time to zag.  As more and more emphasis is placed on analytics, management through data, artificial intelligence and other quantitative factors, it's probably time to reinforce the qualitative side of management.  Management focus on culture and change management is sorely lacking.

Today, I want to focus on change:  why we change, how we change, and what the future holds for change.  I also want to shift from the idea of "change management", which I think is an oxymoron, to change acceleration, which is where I think companies need to be.  Finally, I want to build a case that change management is integral to strategy, not a supporting element or an afterthought.

First, let's talk about why change is difficult and why change management is self-defeating.

Change is difficult.

Change is difficult because no matter how much we want to deny it, corporations are just large agglomerations of people.  And, no matter how much scientific management we have, we aren't Vulcans, who reason only with logic.  People are full of emotion, ownership, pettiness, jealousy and fear.  This means that people individually, and companies more broadly, operate on emotion as much as logic.  And we've taught people, especially in medium and large organizations, that most change is bad - bad for them individually and bad for the company.  Plus, if we are being honest, most people are comfortable with the status quo and don't enjoy change.  They prefer things the way they are and are concerned or fearful about the outcomes of change.  What do they stand to gain?  What do they stand to lose?  What's in it for me (WIIFM)?

Further, intended or not, change almost always creates winners and losers.  No one wants to lose control or power or responsibility if they have it already, so change is feared.

Another reason change is difficult is the power of inertia.  From Newton onward, we've known that bodies at rest tend to stay at rest.  Change in any dimension requires energy to be added to a system.  Most employees are happy where they are, in a known environment and don't want to take on additional work that will come from change.

The thing you want to do least is what is most important to do

What happens, then, when the thing you want to do least is one of the most important things to do? You may not like change, and your business may not want to change, but you don't control external factors that are constantly changing.  You don't control the number of new entrants in your market who aren't concerned about industry stability.  You don't control how robotics and automation and machine learning are shifting job responsibilities.  You don't control the pace of change in your industry.  You certainly don't control your customers and their constantly shifting demands.

In fact, if you aren't constantly changing, you are slowing withering away.  You don't have to change, but you don't have to survive either.  However, it's no longer a question of survival.  Without the ability to change, your company won't survive, and by extension, if you don't change and grow personally, you will find yourself unemployable.  Like change?  Good, because a lot of it is coming your way.  Dislike change? Better learn to adapt or find something new to do.

Whether you like and embrace change, which few people do, or dislike change, which is the attitude of most people, you and your company need to become far more adept at change.

But we have change management paradigms to help, right?

Three reasons change management doesn't work anymore.

1.  Pace and nature of change.  Capabilities are spreading exceptionally quickly on a global scale based on the internet, cell phone network, machine learning and more readily available educational platforms.  Look at Lewin's model of Change - the concept of "unfreezing", changing and "refreezing".  When something is frozen it is unchangeable.  The pace of change doesn't allow for unfreezing and refreezing.  You need to change constantly.

2.  Funding and financing flow to the companies and regions that demonstrate the best returns.  Always true but this is happening far more quickly than before.  Change happens in all directions simultaneously.  When China was still a nascent economy and Europe still recovering from World Wars, the US stood astride the world.  No longer.  We live in a dynamic, multi-polar world where competition can come from anywhere, at any time.  Our change models were built in a time when change was more predictable.  Today change happens more consistently and emerges from a wider array of locations and industries than before.

3.  Resources (people) - Businesses may need fewer people as automation and AI replace people or off-shoring replaces on-shore bodies, but the people you need are more valuable, and are attractive to other employers.  As we need fewer people to get more done thanks to automation and AI, those fewer people become more valuable, more specialized, harder to replace and more transient.  You cannot succeed throwing people at a problem, and the most valuable people have more options than ever before.

When your inputs, markets and people resources are constantly changing and evolving, you need a culture and ethos that embraces change and enables change.  You don't need "change management".  You need change acceleration.

Shifting mindsets from change management to change acceleration.

Change management is an oxymoron because 1) few people really like change 2) as the pace of change increases, you can't "manage" change, you can only hope to anticipate it and direct it 3) the idea of managing something means it can be measured and controlled, which simply is no longer possible.

Change management has always been an add-on, a concept acknowledged but rarely implemented, in major change situations like implementing a new strategy or a new enterprise system.  Now, change is happening more frequently and more broadly, and we are applying old thinking and old tools to a new problem.

What's needed?  People, systems and processes all familiar with and capable of change.

  • People who are incented to anticipate change and learn new skills and capabilities. This means we need to emphasize training to acquire new skills and incent people to change more often and more rapidly.  Today, most people receive very little training, as training is a cost and easy to cut, and their incentives reinforce the status quo. 
  • Systems that enable change rather than create barriers or lock a company into more rigid and inflexible ways of working.  Today, most computer systems and worse the data they create lock companies into a way of working or methods of analysis that are difficult to adapt and change to new opportunities or business models.  Companies are forced to work around their legacy systems rather than those systems creating dynamic platforms that support change.
  •  Processes that are adaptable to new needs and new business realities and business models.  This should be the easiest of the three - developing dynamic business processes that can scale and adapt to new business needs and business models.  I'm still stunned at how many firms lack good processes that reflect how they claim to do business now, let alone how those businesses can adapt their processes to new needs.

Need to demonstrate that change is vital and necessary for the ongoing success of the business rather than an issue or barrier to be ignored or forcibly overcome.  

What do we need?

Companies need to rethink their entire approach to change.  Rather than avoiding or resisting change, the culture of the business and its strategy must embrace change.  Companies may need a change captain or change accelerator as a senior officer.  Companies need to hone their change skills in the same way that they hone their financial skills or marketing skills, to place as much importance on the awareness and ability to change as they do on other core competencies.

Companies need to know when and why to change, meaning they need better foresight and anticipation of future needs and business models.  Once a business model or customer need is evident, it's often too late to change and adapt, because other competitors have also noticed the need.  Getting better at trend spotting and making sense of what will emerge is important.  After all, change needs to be directed in the best possible outcomes.

Companies and their employees need to be adept at change, incented to change.  Plenty of companies are working in "agile" ways but aren't really agile.  The systems, processes and people need to be more dynamic, able to adjust to new customers and new business models.  This may come at the cost of lower efficiency but will allow for more rapid changes to address emerging needs or markets.

Companies need to hire people who are more plastic, more dynamic and can be generalists who can span multiple needs, rather than deep specialists who are locked into one view or capability.  Companies need to invest more in the people they have and try to retain their best people who are most astute at spotting trends, building the rationalization for change and helping people and the organization change.

Change is strategy

Finally, I'd like to suggest that change IS strategy.  Companies and people need to be able to change, anticipate change, prepare for it and execute change effectively.  If a company is building strategy, a key component of that strategy should be what change is necessary, and how quickly should we be able to change?  Change has traditionally gotten the short shrift, if it was considered at all, when strategy is built.  I believe we'll enter a time very soon where change and the ability to change will become far more central to corporate strategy, and the ability to execute change will become paramount.

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posted by Jeffrey Phillips at 8:06 AM


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