The Business World is Transforming
  • By 2025 the worth of the Internet of Things will be $6.2 trillion.
  • The sharing economy will reach $330 billion by 2025.
  • For people starting their education, 65% will enter the workforce into jobs that don’t exist today.
  • The average tenure on the S&P 500 is dropping. Only 25% of the companies in 2012 will remain by 2023.
  • Automation and robotic usage will grow 2,000% from 2015-2030 amounting to $190 Billion market.
  • 86% of global CEO’s are championing digital transformation of their companies.
  • By 2025, half of world’s companies with revenues exceeding $1 billion will be headquartered in today’s emerging markets.
  • By 2018, the data created by the Internet of Things will reach 403 zettabytes a year.
  • By 2030 the population will be over 8 billion people and 50% of Global GDP growth will come 440 cities in emerging markets.
  • By 2030 more than 30% of workforce will be older than 55 in developed countries.

Change Management and the Pizza Principle

Change Management and the Pizza Principle

A person I admire recently explained his view of change management as,

“Taking people who are in a room eating pizza, dragging them by the hair to another room, and forcing them to eat a slightly better pizza.”

This image of violent change for incremental improvement is extreme, but it is representative of many change efforts I have observed and explains simply why so many of them fail. The typical approach to organizational change is top down with a specific intent driven by people who are relatively unaffected by the change. The change is often high risk where failure can have a major impact and success is often determined by achieving the change within a specific time period. As a result, resistance is combated or suppressed. A standard assumption I often hear from change practitioners is that a certain percentage of people will self-select out of the organization because they cannot adjust to the change.

So, if people don’t like the pizza or simply object to the way they are forced fed, they are SOL?

What if someone is allergic to an ingredient?

What if their previous pizza was healthier?

For some organizations, the level of energy and resources required to change in this manner generates a lot of waste, undermines trust, and achieves little for all the pains taken. Moreover, what is considered “success” leaves in its wake unforeseen and unintended circumstances. I have seen statistics stating that between 60-80% of all organizational change initiatives fail to achieve their objectives, but if we look at how many actually achieve sustainable results, the numbers are likely to be much worse. By professional application of change management methods, these odds can be improved. That is as long as the organization is not complex.

In a complex environment, challenges are magnified because of diversity, rendering typical organizational change management methods inadequate at best. These methods assume that change occurs linearly through successive efforts and that by building consensus, people will ultimately support the change.

In fact, many changes are happening simultaneously, sometimes hidden from sight, and the consensus solutions only lead to dissatisfaction and frustration. The change will either have no application or undermine the interests of the agents. It may have unforeseen impacts or be one of many forces impacting them that cannot be reconciled. As a result, many people will openly reject the change or create shadow systems to maintain the status quo.

By looking at organizational change through a Complexity Lens we have an opportunity to see that our assumptions about change… need to change. Here are some of the ways to consider a complex change:

Change is normal and multi-linear: Change is not an event with a beginning, middle and end to be endured. Instead, it is inevitable, perpetual, and happens simultaneously all over the organization.

Change comes from many sources: Change is not driven from the top but comes as a result of many factors and influences. Bottom-up change efforts are recognized and valued.

Change is affected by internal & external conditions: Change is impacted, not only by what is going on inside the organization but also what is changing in the external landscape. The adaptive organization remains ready to adjust to the outside environment.

Successful change comes from observing & adapting: The outcome of organizational change may have a destination in mind, but the adaptive organization does not try to predict what may occur along the way. Instead, continuous observation and adaptation is used to make small adjustments like a ship correcting its course.

Change is efficient and results from many smaller/low-risk interventions: Changes occur at the lowest levels of the organization. This is enabled through the creation of connectivity and establishment of simple rules. As a result, the interventions are smaller while the risk is isolated. Once success is achieved at one level, the change is escalated for consideration at the next level further mitigating the risk.

Change is driven by differences: Resistance simply means that people have competing attractors. Identifying these differences allows for greater adaptation and drives better solutions. Finding a common attractor can help immensely.

Balanced dissent and cooperation is optimal: Dissent amplifies the differences and is to be explored. Where opportunities to cooperate are identified without sacrificing on essential local requirements, synergies exist. Where cooperation would be damaging to one or more players or bring down the satisfaction of whole, other solutions are sought out. Consensus is failure.

Under these assumptions, organizational transformation happens differently. Structuring for change requires a framework that allows for emergent behavior so that each agent or group make changes that at once align with the organization and meet local needs.

Let’s stretch our metaphor to the limit and see how it can work.

In this case, we may still make pizza, but people are encouraged to make their own small pizzas while experimenting with different ingredients. The dough, spices, utensils and oven are all provided (as part of the change framework), but each cook designs their pizza according to their own preferences, desires, and tastes. Some may decide that calzone is better while others may decide to use lavash bread to keep it healthy. A number of cooks may share recipes and partner on a pizza, or they may choose to make a single pizza with some ingredients on one side and different ingredients on the other. Once the pizzas are made, everybody gets to sample the results. If one or two pizzas prove to be popular, then more of these pizzas are made to share. If no optimum is achieved, everyone continues to experiment within the pizza framework.

Now isn’t that a nicer picture than being dragged by the hair for incremental results?  What is interesting is how it works. Whether looking at the way organisms adapt or how companies like Lego or Pixar create, this balance of top down and bottom up adaptation is highly efficient and it can be applied differently depending on the environment. Of course, change starts with an idea. Innovation is what adaptation is really about and Change Management is in inexorably linked to it. A truly adaptive organization never ceases to innovate and remains in a continuous state of change. Integrating these two systems is the path toward efficient adaptation. But, what is innovation and how can it best be encouraged? This is something we will discuss in the future discussions.

David Lee

Executive Director,  MSS Business Transformation Institute

David is a global executive with experience developing business relationships in Asia, Latin America, Europe, and the Middle East, with over 20 years of executive management experience in Fortune 500, mid-sized companies and start-ups. David is a highly regarded facilitator, writer, and public speaker on topics including Business Transformation, Managing Complexity, Disruptive Innovation, and Organizational Change Management.  ASAP™

 

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