3 Things You’re Getting Wrong About Organizational Change

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By Nadya Zhexembayeva | Harvard Management Update

For the last few years, WE EXIST Reinvention Agency — the company I work for — has been regularly surveying its clients on the subject of organizational change. In 2018, out of over 2,000 managers participating in that year’s survey, 47% reported that in order to survive they needed to reinvent their businesses every three years or less. Data from 2020 is still coming in, but based on the first 500 respondents that number has jumped to 58%.

That should come as no surprise, given that these businesses are participating in a global economy riddled with uncertainty and risk. Just consider the World Economic Forum’s 2019 Global Risk Report, which mapped out a grand total of 30 critical and interconnected global challenges — economic, environmental, geopolitical, societal and technological — that the world faces today.

In that report, the spread of infectious diseases was in the Top 10, long before the COVID-19 pandemic became a reality. The trouble is that, although we recognize and may even anticipate risks, we are not good at adapting to them. According to global consulting firm BCG, 75% of transformation efforts don’t deliver the hoped-for results.

Small wonder, then, that companies don’t seem to stay successful for very long anymore. The 2018 Corporate Longevity Forecast conducted by Innosight showed that in 1964, S&P 500 companies would stay on the list for an average of 33 years. It narrowed to 24 years by 2016 and is forecast to shrink to just 12 years by 2027.

This suggests that there’s something profoundly wrong with some of our basic assumptions about how change works. My own experience dealing with clients suggests that many of our change failures come from three very basic, ingrained assumption about what works. It’s by flipping these assumptions that we get results.

1. FROM ‘FOLLOW BEST PRACTICES’ TO ‘SHARE YOUR FAILURES’

Modern management has always had a thing for “best practices.” In classrooms and boardrooms alike, managers use role models to drive and direct change. But new research suggests a better way forward.

Scientists from the Kellogg School of Management in the U.S. ran a series of experiments to see what kind of warm-up leads to a better, more productive brainstorming session. In one such experiment, managers were put together into small teams to generate unusual uses for a cardboard box. Before the brainstorming, however, half the groups were instructed to share an embarrassing moment from the past six months, and the others half to share a proud one. Teams that shared embarrassing stories generated 26% more ideas than groups that shared stories of pride.

Aside from increasing creativity, sharing failures also strengthens a team. In a 1988 paper, Abraham Tesser, a professor of psychology, showed that while seeing others outperform us often threatens our self-esteem, the vulnerability demonstrated by people sharing embarrassing stories about themselves helps them connect with others.

So, if you are hit with a particular disruption and are trying to get new ideas to help your company adapt to this change, run an “embarrassment warm-up” before your next meeting. The quantity and quality of the ideas generated will get better, and the connections within the team will grow stronger.

2. FROM ‘IF IT AIN’T BROKE DON’T FIX IT’ TO ‘FIX IT ANYWAY’

Resistance to change has long been cited as one of the key reasons that companies fail to adapt on time. Research also confirms that few employees are ready to take risks needed to reinvent (between 11% and 19%), especially when the need for change is not immediately apparent. What can we do about this?

The tried and tested technique is scenario and contingency planning — but its use has declined significantly in recent years, from 65% of companies using it in 2011 to only 19% in 2018. The problem may be that it’s a pretty intensive undertaking.

A more accessible version of scenario planning is the “Kill Our Company” exercise. Bring together a diverse group of employees and divide them into groups. Then, ask to brainstorm the most effective and efficient ways to kill the very company they work for. At the end of a typical “Kill Our Company” day, you will find that the range of diverse ideas is matched only by people’s willingness to change in order to avoid the unfortunate fate.

3. FROM ‘CONTROL YOUR ASSETS’ TO ‘SHARE YOUR ASSETS’

Firms typically own or lease resources they use to create value, often locking up cash in assets that they don’t use all the time. The trouble is that when times are volatile, they feel the lack of cash. That’s where asset sharing comes in.

The idea has been with us for a while, and the practice has spawned some very successful consumer businesses, from Airbnb to BlaBlaCar, that essentially allow private individuals to make money out of assets that they are not using all the time. More recent examples include TULU, which helps people who live in apartment complexes share household items (such as KitchenAid mixers, vacuum cleaners and air mattresses) within their building.

There is no question that businesses have some unused capacity as well, so why not share it with other businesses while saving some money, decreasing your environmental footprint and increasing flexibility in the process? Werflink in Belgium did exactly that when it built a public asset sharing platform for the construction sector. In Germany, V-Industry focuses on asset sharing in manufacturing, allowing anyone to access unused production facilities in an easy way.

Whether it’s through running a low-cost “embarrassment warm-up” or exploring the more complex idea of asset sharing, you have to make “adaptability” a part of daily life to survive and thrive in a risky, interconnected world in constant flux. This is not a one-off project, like building a house. It’s much more like a child in a state of continuous growth. And in my book, childlike openness, growth and renewal are exactly what we need right now.


Nadya Zhexembayeva is the chief reinvention officer of WE EXIST Reinvention Agency.

Image credits: Nuthawut Somsuk | Dreamstime.com



SourceHBR.org
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