On Organizational Change

At the heart of all great companies, products, organizations, and people is a fundamental, foundational change. A computer on every desktop, a smart phone in every pocket, anything a click away.

Life is more engaging and enthralling, when we are pushing for change. What is the change you and your organization are driving for?

Change comes in two flavors. Internal change driven from curiosity, imagination, and a desire to improve. Or, External change driven from pain, discomfort, and a desire to get back to what used to be. Think back on changes in your life that match each (Both personally, and at work). Which of the two are more effective and rewarding? If the answer is the first, why is change usually caused by pain?

Much of the literature on Organizational change mirrors literature on changing self. As you think through how you deal with change, know that self-change mirrors how organizations deal with change. For self change I recommend Scott Pecks 'The Road Less Traveled."

For this article, let's dive into chapter 24 of Level Three Leadership, "Leading Change." We will cover multiple change models. Try to understand the thought behind each model and incorporate them into your own personal path.

General Model of Change

The Baseline - Organizations live in a comfort zone. If they didn't, everyday, everyone, would need to relearn everything. However, each day is different. The world constantly changes. As such, everyday new data and new experiences happen. Usually the incoming data conforms with existing ways of doing things and things stay the same.

Dissonance - Occasionally, incoming data does not conform. This leads to one of two reactions. Positive or negative. Positive is curiosity, enthusiasm, engagement, and learning. Negative is hurt, pain, blame, complaining, and defensiveness. Usually, without curiosity; changes in the external environment go unnoticed until they diverge to the point that pain is caused. If you are at the point of pain; you've most likely missed the signal.

Missed Signals - Signals are missed because organization (and people) like to protect the ego. When they see the disconfirming data, they deny, distort, discount, or ignore it. This leads them to keep doing things the same way; or doubling down on what used to work. When signals are missed, it is the leaders job to fight denial, distortions, discounting, and ignoring. Until the organization sees the need for change; change initiatives will fail.

Curiosity - The antidote to missed signals is curiosity, enthusiasm, engagement, learning and a desire to constantly improve through constant change. The wise leader builds these values and behaviors into the culture of an organization. We can see in many top organizations a push from leadership to build the muscle of change. The fiber of that muscle is these values. Without them, organizations too often fall to the pitfalls of missed signals until things are too late to turnaround.

Search for alternatives - Either due to curiosity, or the pain becoming unbearable, organizations seek alternatives to the baseline. This can be done through outside forces of consultants and hiring; or inside forces of analysis. On a personal level it can be a good book, podcast, or video that shows alternative ways. These alternatives can be at Level 1, 2, or 3. Level 1 is change in behavior or actions. Level 2 is change in thinking. Level 3 is change in VABEs (Values, Assumptions, Beliefs, Expectations). Often, powerful change requires all three levels and will fail if only surface change is made.

Experiment - Alternatives start as potential solutions. Organizations try new behaviors, new ways of thinking, and new VABEs to see if those alternatives are better at dealing with the new reality. A key role of leadership is to make sure experiments are intentional, monitored, and well designed. Often, organizations "thrash" in the face of change; or feebly attempt experiments, or give up quickly to justify returning to old behaviors.

Experiment Results - When experiments are run they generate new data. This data either confirms and encourages change towards a new path; or it fails and either new alternatives need to be sought, or people will fall back to ineffective baseline behavior.

New Baseline - When experiments succeed and change starts; those new ways that better fit the new environment, need to be driven throughout the organization. Leaders need to highlight success in early change, to encourage others to also adapt. They also need to look at structural/process changes to drive the new throughout the organization so that it becomes a new default baseline.

A thoughtful organization builds muscle memory for change. They methodically look for "drift" and have ways to analysis new situations, and implement experiments to constantly adapt and improve. Embracing change is the heart of a "learning" organization.

Review of Academic Change Models

Kurt Lewin: Unfreeze -> Change -> freeze.

This model is typically not followed in modern business because change is constant in the modern world. Change -> Change -> Change is more the norm. However, the concept of unfreeze is helpful if an organization is unable to see the signals.

Michael Beer from HBR:

Math Formula: Change = (Dissatisfaction with status quo * Model of the future * Process of Change ) - Cost of Change

People won't change unless they are unsatisfied with current state (Leaders need to show the signal). People won't change unless they can see a positive future (Leaders need to have a clear vision). People won't change unless they see how to change. (Leaders need to identify how people can join the change and what concrete actions they can take). People won't change if change is costly to them. (Leaders need to remove blockers and make change adoption easy).

Elisabeth Kubler-Ross from "On Death and Dying": The process of change relates to the stages of terminally ill cancer patients. This path is not exact for everyone, some steps are skipped or happen in different order. But in general people jump from an activity to a feeling. . . Denial -> Anger -> Bargain -> Despair -> Acceptance (By Experimenting, finding Hope and Integration)

There is an incongruence between what we expect (life) and reality (a person is dying).

This causes the activity of denial. Deny the message. Deny the messenger. Deny the relevance of the message. Deny ability to do anything about the message.

Once message is accepted; people feel angry. In business that could be anger at customers for leaving, anger at other employees, anger at bosses or employees. Anger that past success is not working anymore.

Once people move past anger they act to bargain. In business this is thinking, maybe customers will come back in the next season. Maybe if we work harder. We just need to educate the customer.

Once people realize the world is what the world is, and there is no bargaining out of the situation. They feel despair and grieve. In general it is healthy to celebrate the past. To grieve the little deaths that change causes.

At some point in the grieving process people start accepting the situation. Once accepted they can see possibilities. These possibilities lead to the activity of experimenting in doing things differently.

As experiments lead to different results; people feel hope.

Eventually, that hope leads to the action of integrating with the new realities. This step is often not like a light switch turning on. Usually it's noticed in the rear view mirror; when you pay attention and notice you do things differently.

Phases of Change Model:

Complacency -> Turbulence -> Resistance -> Small Wins -> Consolidation -> New Baseline

HBR John Kotter Model of Change: Leaders should follow these 8 steps in order.

1) Establish a sense of urgency by creating a compelling reason for why change is needed.

2) Form a coalition with enough power to lead change.

3) Create a new vision to direct the change and strategies for achieving the vision.

4) Communicate the vision throughout the organization.

5) Empower others to act on the vision by removing barriers to change and encouraging risk taking and creative problem solving.

6) Plan for, create, and reward short-term wins that move the organization toward the new vision.

7) Consolidate improvements, reassess changes, and make necessary adjustments in the new programs.

8) Reinforce the changes by demonstrating the relationship between new behaviors and organizational success.

The Four P's: Change is done by managing four Ps.

Purpose (why change), Picture (vision of future), Plan (path to future), Part (how people contribute).

MIT Model Of Change: The most important thing in change is managing resistance. This is done with 7 activities that are all used during four phases of change. The challenge to leaders is determining which of the 7 activities are needed in which phases.

Phase 1: Recognize the old way doesn't work anymore.

Phase 2: Search for new approaches.

Phase 3: Generate new process and approaches

Phase 4: Internalize the new processes

The seven activities are:

1) Persuasive Communication

2) Participation

3) Use of expectations

4) Modeling

5) Extrinsic Rewards

6) Making structural and organizational changes

7) Coerce

MIT Multiple Realities of Change: During change different people and groups will view the change in very different ways. The key to change management is knowing which activities are required to influence each group. Often, people attempt to make everyone view the change in a similar light. This can be a mistake. The diversity and different lenses different groups bring to the situation can be adaptive and a powerful advantage in facing change.

Prochaska's Model of Positive Change: People don't change in a straight line. Rather they make attempts and often fall back to previous states. Change takes energy and multiple attempts. The key activities that people bounce between are.

1) Pre-contemplation: Unaware of the problem.

2) Contemplation: Want to stop or change.

3) Preparation: Determine to do something soon.

4) Action: Do something about it.

5) Maintenance: Careful attempt to keep momentum and avoid slipping.

6) Termination: The problem or threat is overcome or gone

Robert Maurer: Go slow. He argues most change fails because we do too much or try to force others to do too much. If change is broken up into very small slices; each slice isn't scary and can be taken. With enough small steps; miles are traveled. This is a very agile view. Care needs to be taken that the steps go in the right direction, that reality isn't hidden, and steps are constantly taken.

See www.level3leadership.com for more.