London Business School’s Michael Jarrett argues that being ready for change is the route to actually achieving change. He talked to Stuart Crainer about his new book Changeability.
There’s a lot of research into change, what’s the headline finding in Changeability?
If there’s a headline, it’s this: there appear to be five factors that most influence the success or failure of a change initiative. Whether the organization is large or small, these factors seem to play an interconnected and critical role in whether a company implements positive change in significant enough proportions to keep the organization stable and, hopefully, successful.
Tell me about your research.
In all, we’ve examined 4,500 individuals in 255 organizations. These span 25 business sectors, and only a little more than one-quarter was based in the UK. We’ve taken our studies around the world, from Australia to Zimbabwe.
So what’s the first factor?
Companies need to scan and do constant “radar sweeps” of the environment for trends that will — or might — affect their business. This translates into a lot more than just reading the business journals or keeping up with the news. They need to collect information about what their competitors are doing, what their customers are thinking, they need to be cognizant of the “soft data” that comes from their own workers and managers conversing about what they’re seeing in the marketplace. All of this must be sifted through rigorous strategic analysis in an ambiance of being willing to anticipate change, not just wait till it wallops the company over its collective head. I call all this scanning the horizon.
Presumably scanning is only the start?
Of course! Companies also have to read the signs of the times. This involves “sense making” of the data with regard to its organizational implications, interpreting sometimes seemingly incongruous or unrelated data to see if the dots connect to a pattern of significant change. Top management needs to construct, test and polish its process for doing all this. Companies spend inordinate amounts of time working on how they will assemble their strategic planning processes. They have to spend equal amounts of time on analysis of changing marketplace conditions. Of course, such a process must be relatively free of political biases or emotional distortion. Companies need top leaders who can make decisions about change using rational insights and solid judgement. After all, the entire future of the company could be on the line.
When does a company act? Isn’t action important?
Absolutely. But it’s important to note the third factor that we found critical to a successful change effort. Before acting in a major way, the company needs to harness internal ingenuity by fostering innovation and collaboration. It’s too easy, I’m afraid, for a company to become as myopic in dealing with change as it might have been in failing to take the widest possible view of what’s happening in its industry and marketplace. Companies that can leverage a special openness to differences and diversity — tapping into the interpretations and recommendations of many different kinds of people — are much more likely to come up with the best plan of response to a major set of changes challenging them. Likewise, these same companies (perhaps because of their openness to differences and diversity) display a willingness to innovate and to use conflict as a source of new ideas. Another way to say this is that such companies learn quickly how not to fear doing things in a whole new way; they take risks and encourage mistakes as part of the required learning which will make any actions they take, by design, relatively more prudent actions.
If organizations and leaders are under pressure to change can they realistically afford to make mistakes?
I often speak to audiences in sailing terms since that analogy works for me whenever I’m talking about organizational change. If you ever look at a major sailing race, the winning boats do not move in straight lines against a prevailing wind. They tack from left to right and back again to gain as much advantage as they possibly can from prevailing winds. And, to address your question, they sometimes run aground. I love the quote from famed sailor and boat builder, Don Bamford: “Only two sailors, in my experience, never ran aground. One never left port and the other was an atrocious liar.” Anyone who says that their company dealt with major change in a straight-line, no-mistakes-made way ought to consider the wisdom of Don’s comments.
Then it’s okay to start dealing with change without being paranoid about hitting some turbulence?
Turbulence will happen whenever major change is on the corporate agenda. It creates anxiety and unpredictable behaviours. Thus, the fourth factor that makes some companies successful in managing change, and some not, deals with the social dynamics of change. When, after data collection, analysis, debate and wide involvement, a company does respond to a challenging change, they need to do so by making sure they fully understand how their own people and organizational culture can derail their chances for success.
Companies that change successfully do so by making change part of their DNA; they teach people to overcome fears about leaving the status quo behind, to take prudent risks, to work in unison to maximize the chances for dramatic change, and to help one another cope with the disquieting times and inevitable turbulence that accompanies all major change efforts. Creating an environment that helps people to deal with the shadow side of change is critical to success.
I mentioned earlier that managers and employees need to overcome their fears. If not, what often evolves is a set of dysfunctional defensive routines that undermine the process of change. These routines are nourished by internal politics, ego-driven behaviours, cliques, and inner circles that combine to generate a form of self-subversion. And what’s subverted is the realization of what’s best for the whole organization, not just what’s good for any one person or clique.
Then there has to be a fluid execution of change?
That’s the fifth factor. Companies succeed or fail in positive, sustained change to the extent to which there is sharing and “organic” organizational structures that assist integration of change initiatives across different functions and tasks. These are preconditions for fluid execution. “It is easy to do business around here,” I have heard managers comment. Just to stress the point: it’s not enough for marketing to change and hope that engineering will follow right along. Top leadership can’t commit to change while middle management hunkers down and defends status quo processes and procedures with all their might. When it comes to change, the people in accounting and the people in shipping have to be performing according to the same script. This calls for the highest level of organizational communication. And, to be emphatically clear, all organizational silos must be taken apart and dissolved in the interest of the entire company succeeding in its need to change. Breaking down the silos turned around Nissan and United Airlines during their recovery.
Is it possible for an organization to change without its top leaders leading the change?
Let’s say, strongly, that in such a situation, positive, needed changes are not likely. That’s one reason I cite P&G as a model. Its CEO, A.G. Lafley, grew up working in many parts of the business. He was a true insider. Yet, when he took on the top spot, he found he had a lot to learn. He, and P&G, are models of mastering change.
Changeability by Michael Jarrett is published by FT Prentice Hall.