We need to talk about organizational change management

As I look across the enterprise landscape I see an impending sense of doom. Whether it's because my business is getting hammered by Amazon, a new fintech coming out of left field, a new technology that puts into question my reason for being, the pressures of just keeping up let alone making progress are palpable.

Too often I see managements falling for the latest shiny fashionista tech moniker and rushing to implement but without much forethought as to the consequences both intended and unintended on the people who have to live with whatever is coming down. That has to change or, as in so many instances we've seen, the business falls apart.

At the very highest level, we increasingly see companies where they know something has to change but don't know the best course. Where those same companies manage to thread a strategy, they don't know what it means to impose the required changes. Worse still, and as Panorama has documented, they don't think it's important to embark on an inclusive change management program. (Author's note: the article I've linked to here should be required primer reading for those embarking on a change project.)

Where I think many people fall down is in failing to communicate that the main purpose of most today's projects is to remove rote or repetitive work on the journey to eliminating anything that can be handled digitally as part of a longer-term vision to better serve customers. In that context, too few are considering how this impacts people who have to live with this shift and what it means to work in those environments. that engenders fear among people. And when people are frightened survival instincts kick in and they keep quiet. Want evidence? Check the Lidl trainwreck.

Communication may have also been a problem. The challenges the new system needed to overcome may not have been properly defined, say IT experts. Perhaps the IT department and those doing the actual work did not talk about this enough, they suggest. Also noted: Ongoing changes in senior management at Lidl, from digital technology and e-commerce divisions right to the top. After ex-Lidl chief Sven Seidel left, his successor, Mr. Hoyer, cancelled a number of planned digital initiatives, such as an online ordering service named Lidl Express.

But it's not all bad news.

RPA - setting the tone and pace of change management

Today, for instance, we see plenty of focus on robotic process automation or RPA as the first of many steps on the digital journey. In that context, I was particularly impressed with a BluePrism event presentation by Olympia Baldrich, VP innovative automation and banking services at TD Canada Trust. In the presentation, Ms Baldrich makes the point that RPA, as they're implementing it, is designed to release people to undertake higher value work. That makes for an interesting set of questions. For example:

1. What do you do to help those people develop new or uplifted skills?
2. How do you encourage people to ask questions as a way of eliciting where their true talents lay?
3. How do you discover the storytellers that have an authentic voice that resonates with the rest of your people?
4. How do you give people permission to try new ideas and, likely fail at the first attempt?
5. What do you do about those l2/L3 managers who've been building empires for the last 20 years who now find their empires crumbling?
6. How do even remotely get close to the much talked about collaborative and flexible enterprise?

None of these are easy questions to answer but one clue Ms Baldrich gives is in acknowledging that not all processes are right for RPA. She went further by saying that in some instances, her company rolled back and terminated RPA projects.

At another Blue Prism event, Lynda Gratton, Professor of Management Practice at London Business School talked extensively about learning as an integral part of the preparation for the future of work. She says:

It is clear to me that lifelong learning is going to be at the heart of everything we do now.

No argument from me but how can that happen when we have seen decades of learning neglect and, in recent times, an over-eagerness to cast off the decades of accumulated wisdom that our older people have stored in their heads?

The leadership problem

I've seen plenty of arguments that say the organizations of the future will change from the bottoms up. If only that were true. I see adjacent arguments that say hierarchies will flatten over time. Maybe but then that's not the way most businesses are organized today. I've seen and at times advocated for the notion of fluid project teams, where the right people come together to execute on a mission and then dissipate once the project is completed. But those are in special circumstances and are not the norm.

The commonality is that leadership has yet to operationalize and communicate change such that these net good things can happen in a manageable way. An example.

Some years ago I was invited to an all-hands meeting attended by about 800 people. Two senior company board members took it in turns to espouse the reasons for what was a planned massive shift in the way things are done. The point that was hammered home time and again was simple: change or die. But here's the curious thing. That rallying call - which I personally found encouraging - was met with almost stony silence and aggressive questioning. The reality was that particular group saw no reason to change. They were comfortable doing the familiar in an otherwise successful business. From their perspective, they couldn't see the trainwreck ahead that leadership saw.

I call that a failure to communicate. Since that time, it has been difficult for the company to get people onside because...the company continues to be successful in a market where it has cemented its position through other means.

However, the times they are a-changing and what they're faced with now is a disconnect between what the leadership says in public and what is happening on the ground. It's not too late but in this case, I sincerely hope that it doesn't take serious pain before everyone comes on board.

When we look at the disaster area aka retail, we see storied brand after storied brand suddenly facing collapse or serious trouble. It's not so long ago that we were pretty much writing off Macys. Even now and having delivered way better than expected results, market makers are battering the stock price. Our own Stuart Lauchlan remains skeptical:

(CEO) Gennette makes a good case for an omni-channel operating model being achievable and the digital investment is taking place, albeit at perhaps too slow a pace. But is it too little, too late? That’s a question we’ve been asking for several years so far. It’s one that I suspect we’ll still be asking at the end of 2018.

Is this kind of problem avoidable? I say yes.

It is easy to point the finger at Amazon but then as others have pointed out, there's no real magic in what Amazon achieved. They just put the customer at the center of their strategy while bricks and mortar stores stood idly by.

What to do?

I believe, based on observing how change works and doesn't, that the single biggest cause of failure is one of leadership communication and commitment. Here I mean that leadership is often very good at delivering expansive visions. They have to in order to keep financial analysts onside. But leadership often make the mistake of assuming that because they've said something or explained X to the L1 folk that X will happen. Leadership then moves on to the next thing. As I detailed earlier, it doesn't work that way.

Whether you believe that Hewlett Packard or Abe Lincoln invented the concept of managing by wandering around, there is a great deal to be said for going out and listening to the troops. In the UK, there have been TV series dedicated to following CEOs who anonymously go to the shop floor and make eyepopping discoveries - often unearthing great talent along the way. How hard can it be for leaders in all industries to do that? How hard can it be to lay out a vision but then ask questions of those who have to live with the outcomes? How hard can it be to take the position that the carefully constructed hierarchy is standing in the way of communicating and living a change message?

But that's only step one of many steps.

What to avoid

Like you, I've read enough so-called thought leadership to know there are many ways to skin the change management cat. Most of what I see provides eminently reasonable 'X-steps to success' stories that are predicated on a journey that is often heavy on process and technology and only vaguely tangential to the needs of people. Again and as I've said before when you forget the people element, you're setting yourself up for failure. In 2015, McKinsey said: 

We know, for example, that 70 percent of change programs fail to achieve their goals, largely due to employee resistance and lack of management support. We also know that when people are truly invested in change it is 30 percent more likely to stick. While companies have been obsessing about how to use digital to improve their customer-facing businesses, the application of digital tools to promote and accelerate internal change has received far less scrutiny. However, applying new digital tools can make change more meaningful—and durable—both for the individuals who are experiencing it and for those who are implementing it.

That research is still used today. Which tells me that little has changed.

Today, I know this problem exercises the minds of many practitioners but I sense they are stuck. Who for instance wants to announce that hundreds of people's work is being eliminated but oh by the way we're going to have a super productive workforce that loves its customers? How much collaboration does that engender? How much ideation comes out of that?

It's far more comfortable to focus on the introduction of technology and attempt to manage the fallout as it occurs. Except that it is neither comfortable nor optimal.

In conclusion

I'm all for the notion of a digital enterprise that is designed to best serve the needs of customers in real-time, or rather right time. But if we are to build customer-centric organizations, then we need to flip the customer coin and commit to recognizing that the people who are working towards achieving that goal are customers too. Treat them with the same respect and reverence and results will follow. Treat them as a resource that needs managing like spare parts that can be replaced, and you'll fail.

Above all, listen, learn, feedback - rinse and repeat.