You gotta change the rules of the game!

I my work as a consultant, I am often involved with innovation projects. These, in turn, are often part of larger initiatives for change in organisations -- that don't get anywhere. This is deeply frustrating both for me (because my technical work isn't really very useful in this case) and for lots of people in the company (because they see their organisations linger on instead of making the changes most agree are necessary for the future). In this post I want to provide a little bit of insight into why these train wrecks happen.

If an organisation decides it wants to change something, then the first step is to define the general direction. This is usually driven by (perceived) market forces ("Our Chinese competitors are really catching up!") and is often relatively clear. "We have to emphasize our service business" or "we must reduce our development effort per product" are examples of such goals.

Unfortunately, in many cases, people cannot explain what this general direction of change actually means. How far do we have to go? Do we completely give up on selling products and focus exclusively on services? Do we have to outsource our complete development to cheaper shores? What drawbacks would that have? What are concrete, relatable, observable or measurable changes we want to achieve? For example, in order to focus more on services, do we have to change our relationships with component suppliers? How do we have to change our system architecture to be able to, for example, more easily integrate third-party components? What does this mean technically for interface specifications?

It is crucial to make the goal more concrete so that people can understanding what the goal means for their part of the organisation. Purely high-level business-speak doesn't cut it. Sometimes an organisation, after announcing the general direction, is unable to make these concretisations. Likely, the initiative is gonna die.

However, even if the concrete goal is defined, organisations cannot change from where they are now to that (possibly far away) goal from one day to another. There must to be a path to reach the goal step by step. Often multiple paths could work, so finding out and communicating which one is the best -- or at least, which one should be tried based on the information that is currently available -- is another important step in making a "strategic change" a reality.

So let's say we have successfully decided and communicated these three steps: general direction, concrete goal, path to get there. We decide to get going, and ... not much happens. We get stuck very early on the path, the initiative becomes a zombie. The goal is never reached. Everybody is frustrated. In my experience this is where the fate of change initiatives is decided: does the implementation actually make progress? Or are we stuck in the vision/idea/planning phase?

The reason why change initiatives get stuck can often be found in "soft" factors. Culture ("this is how we do things around here"), people's incentives ("I am judged by next year's product sales, not by whether we reach this faraway goal"), and power structures in the organisations ("if we make this change, I will lose half of my people, reducing my influence among department heads"). These factors are usually much more powerful than any change initiative, concrete or not. If culture, incentives and politics aren't aligned with the the new direction, the initiative will die. This may sounds like a trivial statement, but I have seen many change initiatives that failed for this reason.

Even more importantly, culture, incentives and politics don't just have to be aligned with the end goal, but also for the intermediate steps. It's a bit like in natural evolution: a new phenotype can only (continue to) evolve, if even the intermediate steps, where the new feature is still imperfect, are able to survive.

So then the question becomes: who or what can change culture, incentives and politics? How can we change the rules of the game so that we can adapt the incentives and power structures in a way that will allow us to really make progress along the path towards a concrete goal in the strategically desired direction?

Why am I writing about this? Again: my DSL work often happens in the context of such change initiatives. The general direction is often clear, and, as a consultant who usually works on the technical level, I have a reasonable degree of influence on the concretisation of the goals and the path to reach them. I have helped several customers in this respect.

But unfortunately, the overall initiative often fails to materialise because of the culture/incentives/politics environment. It is very hard for me to affect those, but I will point out a few things an organisation can do anyway:

• Explicitly allocate resources to working on steps in the new direction (too often, there are simply no people available to do the work). Make clear which aspects of the current daily activities are ok to be reduced in order to work on the new direction; if this is not explicit stated, people tend to work on the concrete stuff of today instead of on the things that contribute to the far out future.
• Show real management interest in the progress of the change initiative. For example, run a one hour monthly meeting/video/podcast with everybody, hosted by management, that showcases concrete progress and highlights the people who made it happen. Too often, management "disappears" after they have given the go for a change project. This is bad, because, obviously, management doesn't care. So nobody does any work.
• Publicly praise the people who make progress towards the goal. Be concrete, include people's names! Make sure the actual operational level folks are included -- if this becomes a "management praises each other" show, then it has the opposite effect.
• Literally change the financial incentives for key people ("Zielvereinbarung" in Germany) or promote those who work in the direction of the goals.

A few closing thoughts. I see similar dynamics in society at large. We want our energy system towards using more renewables. This goal is agreed by most politicians and citizens alike. The goal is even reasonably concrete, based on the CO2 quota defined in the various climate treaties. There's even somewhat of a plan how to get there, with concrete numbers regarding new wind power plants and new high voltage transmission lines for the next few years. But ... there's reason to believe that we won't reach the goal. Why? Adminstrative processes take forever (because they have always been done this way), elective structures provide the wrong incentives to decision makers (for example, short term instead of long term), and certain organisations have too much power and influence. Unless we change the rules of the game here, it's unlikely we will reach our goals. But how do we change these? I have no idea.

Note: just that nobody gets the wrong ideas here. I am absolutely not advocating for some kind of authoritarian government. But it would be nice if democracy, government and administration could be made more efficient and faster. Somehow.