CHANGE OR DIE? WHY FAMILY BUSINESSES MAY INHERIT THE WORLD – INTRODUCING THE PHENOMENOM OF ‘FAITHFUL ADOPTION’

“In life change is inevitable. In business change is vital.” Warren Bennis.

“If the rate of change on the outside exceeds the rate of change on the inside, the end is near.” Jack Welch

“The next ten years, business will change more than it did in the previous fifty.” Bill Gates

Perhaps I don’t need to convince you about the need for businesses to navigate change. Equally, perhaps I don’t need to make the case that the speed of change in business has increased over the past 50 years. I suspect there may be some exceptions to this but only in a dwindling number of cases, where an incumbent can somehow insulate itself from the disruptive forces of technology and globalisation. But even in these cases, it would be silly to pretend that at least in some ways, whether it be email over carrier pigeon or accounting software over pencil and paper, change has not found a way to make work today unrecognisable from a generation before.

As a practitioner in the field of organisational development (OD), one question that has fascinated me is how do businesses change? How does change occur? Or perhaps more pragmatically, how can I help the businesses I work with navigate the course corrections necessary for them to avoid obsolescence, emerge from a crisis, or, to be more positive, opportunistically become the disruptive force in their markets?

In this blog, I will share the results of the research I undertook for my doctorate, which fundamentally changes at least my understanding of how a business can achieve wholesale, deep, second-order, strategic change.

CONVENTIONAL WISDOM ON CHANGE

What is the collective wisdom on change today? You may recall I talked about this before in an earlier post. Before I undertook my doctorate research, my view of change was essentially summed up by Figure 1 below:

FIGURE 1- HIGH LEVEL CHANGE DECISION TREE

My illustration is intended to be light hearted. The point I’m trying to make here is that where some systems and process changes can be ‘contained’ and project managed in a predictable way…the big change challenges that often accompany a company attempting to avert crisis or grasp a big new idea are often difficult to predict…difficult to manage…and create tough choices that many companies struggle to come to terms with. In my illustration, I show this as the organised chaos branch of the decision tree.

Incidentally, my friend David Buchanan has developed a spectrum on the magnitude of organisational change that is very insightful. For those of you who haven’t seen it I recommend the time investment.

THE PROBLEM WITH ‘STRATEGIC’ CHANGE

So…while not wanting to suggest all process or systems change is straightforward, the degree of difficulty of adopting, for example, a new HR performance management process or SAP, typically is considered more straightforward than, for example, getting a digital memory company to become a microprocessor company (Intel) or two separate companies to become one company (HP/Compaq), or a near bankrupt company to beat the odds and survive beyond 10 years (apparently less than 10% have achieved that goal).

Conventional wisdom on this subject suggests the main obstacle is people in an organisation resisting or ignoring a need to modify behaviours. In fact, this has become so widespread a belief that few people I’ve have met would challenge this. This concept of 'resistance to change' is too some extent intuitive….people as I’ve mentioned before do struggle to change habits, particularly as they enter middle age. Many academics have written about this and have supported it with what seems like convincing evidence:

1 – Lewin, perhaps, was the father of this concept of resistance with his field theory work, the notion of unfreeze, change, refreeze is accredited to him. The first phase here suggesting that individuals and organisations have forces which create an equilibrium and prevent change. Like a force field protecting the status quo. Unfreezing requires some intervention…some new force to be bought…or an existing one weakened…before change can occur.

2 – Of course John Kotter is the contemporary ‘guru’ and most widely read author on this subject. In his case, he devotes significant time to explaining how people in an organisation need to be included in a strategic change program, how an alliance of people is required to prosecute and maintain change, and how employees generally must ‘buy in’ to the benefits of the change (i.e. the change needs to be seen as preferable to not changing).

I could list more authors who have dedicated significant time, and academic labour, to the this concept of reducing organisational resistance to change (see for example Holt and Armenakis). I could also talk about the consulting companies who are engaged in helping companies run ‘change programs’ around the world. The wisdom of spending significant time upfront in a strategic change program attempting to engage and reduce an organisations ‘resistance to change’ is, I would argue, largely unchallenged. So…surely these guys know what they’re doing….right?

BUT WHAT IF MAGNETO REALLY EXISTS AND FOR THAT MATTER LET’S NOT FORGET THE POPE

Well…..what if there was force at the heart of an organisation that was so strong it could literarily move the entire organisation based solely on unquestioning faith? I like to think of this force like Magento in the X men series. 

FIGURE 2– MAGNETO

For those of you not familiar with Magneto’s power, he can harness electro-magnetic energy. See here for a great youtube that explains this awesome power. However, at its most straight forward, Magneto can instantly attract or repel anything. If we were to stretch the analogy to a change program….a strategic change program…..he might be able to dispense with the notion of alliances….persuasion…or resistance….simply by willing something to happen.

Now here my analogy might break down, because you will quickly make the point… “But wait a minute…while he can FORCE people to move…Magneto can’t make them want to!” OK…that may be true. However we are after all talking about a fictional character and this was a metaphor. So while I prefer Magneto…lets maybe think of the Pope. For many Catholics, there remains a belief in the infallibility of the Pope. This is to say, that a dictate from the Pope is accepted by many in the faith without question and…here is the point…accepted unquestionably and willingly…based on a strong FAITH.

What if such a figure existed in an organisational setting…well maybe conventional wisdom might be misplaced…at least in some cases.

OWNER CENTRALITY, FAMILY BUSINESSES, AND THE DISCOVERY OF FAITHFUL ADOPTION

This is where my doctorate research comes in. I spent nearly 4 years embedded in a large Indian family owned business attempting strategic organisational change. This business had exploded onto the global business scene and after 40 years of existence was now contemplating how it could perpetuate its success. I witnessed this business try to follow Kotter’s model, then struggle with it, and then ultimately decide it needed to dispense with it and invent a new approach to achieving change. Despite my own scepticism, I then saw them succeed and do so at a pace that was unprecedented (at least in my experience). Quite simply, the owner of the business devised his new strategy, worked tirelessly to work through as many details as he could, and then he simply, but amazingly, asked his employees to embrace the changes…..AND THEY DID! He did this largely himself. He staked his personal reputation to the cause. He made it very clear it was his wish and belief this was the right thing for the company. And when he asked everyone to jump……they jumped!

In this business, such was the power of the central owner and business leader that employees in the organisation…all of them….all 100,000 plus….were willing to faithfully adopt new ways of working….wholeheartedly. It was extraordinary to witness and chronicle in my doctorate thesis. I also believe it represents an important discovery for change practitioners. Such was the reverence with which the business owner’s entrepreneurial prowess was held, that people were willing to take the leap that any change he requested was the right one for the business and them personally. Questions of personal valance were put to one side or swept away by the simple belief that his request would be in everyone’s ultimate best interest. Any reservations they may have had evaporated. They listened to what he asked….nodded their heads…sought the answer to a few tactical clarifying questions….. and then turned a sharp corner. They immediately embraced new ways of working and their supporting systems and processes. In my thesis I named this phenomenon Faithful Adoption.

It may be hard to relay this to a Western audience where we are accustomed to employees being strongly ego fulfilling, independent, and personally profit maximising. In part, the fact this business was based in Asia will clearly have played a role. Nonetheless, the transcendent behaviour of employees did seem familiar…embodying aspects of religious faith or patriarchal forbearance in a strong family unit.

It is this last point that resonated most with me. Families often have a strong central patriarchal (or matriarchal) figure who carries great influence. What fuels this power is certainly family ties but it is amplified by a sense of the central figure as attempting to ‘do the right thing for the family’ and that they ‘promote fair play’ and, importantly, ‘are seen as being selfless in helping others.’ Our society may have become cynical of the politicians who have assumed the roles previously held by the village wise-person/elder construct, but we can probably still all relate to a figure in our lives we occasionally look to for guidance and are unquestioning of their wisdom. It perhaps shouldn’t therefore be a surprise that in family owned businesses, this same phenomenon could transcend the family blood line and extend to all of an organisations employees. Elements of this dynamic have been observed by a good number of researchers over the years (see Brundin, Dyer, and Ward). In my research, I was also fascinated to read Popper’s work…where he talks of the magnified power of a central leader potentially taking on mythical proportions the FURTHER employees became from direct interaction.

AND SO WHAT'S THE POINT?

So here is my punchline…..I have two key points:

First – My research shows unequivocally that there is at least one large family owned business that has been able to achieve strategic change while not following the conventional wisdom of negotiation and persuasion…perhaps we have found a proverbial black swan? I was tempted to show a black swan here but my preferred image is Figure 3!

FIGURE 3 - OUR BELOVED SPOCK SHARING HIS WISDOM

Second, if there are firms like the one I studied with a strong central figure, they can leverage the power of Faithful Adoption to bring about strategic change significantly faster than others. 

This last point should be HUGE news for family owned businesses competing with institutionally owned multi-nationals. One can’t help thinking that today many family businesses may feel disadvantaged in the race for the future. But my research suggests that if they use their Magneto powers they can achieve change at a rate impossible for their competition to match. 

So….my point here is simply this:

Family businesses can beat their competition…..all they have to do is make sure they don’t fall into the trap of assuming that conventional strategic change wisdom is the only way to achieve change…..instead they should embrace their familiness…..their inner mutant X-men super powers….and leverage their distinctiveness!

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