Thoughts on change - prof. Mike Miles

Q:  In business it’s change or fade away. Right or wrong?

M.M.:  Some people make this rather dramatic statement and it holds some degree of truth. If you look at the Fortune 500 companies listed in 1999 and then take a look at the same list in 2009, over 50% of the 1999 listings don’t appear on the list any more, either through failure, acquisition by other companies, or by simply underperforming their peers and falling off the list.  But such an analysis is a little superficial.

In fact, there are two qualitatively different kinds of change. Will McWhinney, a systems thinker from the US named the two “Revitalization” and “Renaissance”. The first (Revitalization) comes into play where a company has a solid core product or market niche but has let its processes (or development of enhancements to its core product) fall behind the market. The company may not be threatened with annihilation but rather with exodus of shareholders looking for brighter prospects. In this form of change, the intent of the company is to increase a slumping financial situation, regain or improve brand recognition, and generally “make things better.” In such cases the chances of “fading away” are small and might happen only over time.

The second (Renaissance) is much more radical. It happens when company situations change dramatically (for example, the introduction of qualitatively new products to the market that render a company’s core product or production processes obsolete). An example of this could be Netflix’s entry to the market and the impact on CD rental firms. In such cases, companies have to radically rethink their businesses, either closing down or repositioning themselves in new and unique ways. Canada Post is in the process of doing this rather effectively with a shift away from paper-based mail delivery to low cost and extremely efficient delivery of on-line purchases.

Back to your “change or fade away” dilemma. In the case of a revitalization scenario, companies can survive over a longer term, though probably not with the same brand appeal or investor interest as before. On the other hand, the renaissance scenario requires immediate change or death. In this case, the “fade” will come quickly!!!

Q:  Why do people (and organizations) resist change?

M.M.:  First of all, I think there is a small distinction that you need to think about when discussing change and resistance. If you stand in front of any group in almost any organization and ask the question “Who wants change?” you will get a surprising number of supporters of change. Many people are frustrated by policies and processes that get in the way of them doing a good job. They see that if those could just be changed (or their bosses who appear to create and support those policies were to be changed) then their lives would be easier, more fulfilling, and perhaps more productive.

On the other hand, if you change the question slightly and ask instead “Who wants to change?” you find a resounding silence settle over the room. When the fingers are pointed outward (other people and their policies change), then people are highly supportive. When the change focuses on individual routines and processes that people have become adept at (even if they are not the most productive), then change becomes a negative thing. To put it bluntly, we human beings become creatures of habit. To some extent we become invested in the habits of the work that we carry out. When someone suggests that we change these, we all know instinctively that this will require effort on our parts – sometimes LOTS of effort – and the aversion to putting out effort on changes to things or processes that we have become used to doing or ways that we have become used to doing them generates resistance.

There are actually more complex reasons that people resist things. At times individuals hold values that clash with changes that are being promoted. This is by far the more difficult type of resistance to deal with. At other times, people resist change because they do not like the people promoting the change (“they are management and we are workers – this can’t be good!”). Again, a difficult type of resistance because it is often more philosophical than practical in nature. Another type of change is driven by different experience bases of the people involved, with some having experienced the change being promoted as feasible and others lacking this experience. Finally, some participants in the change program may not see what is in it for them – the famous WIIFM (What Is In It For Me) acronym. If there is nothing but the hard work associated with the change as a reward, few people buy in – and that is very reasonable.

The critical issue for change management is to identify the source of resistance (values, interpersonal/philosophical tensions, mixed experience base, WIIFM issues). Good change managers then design elements of their change process to take the time to address each of these fundamental issues driving the resistance.

Q:  How do you overcome resistance to change?

M.M.:  First of all, a perceptive on resistance: resistance is a gift! (Except, of course, when it happens to your own projects, in which case it is just a necessary hassle). I say that it is a gift because when people are openly resistant you can learn a lot from them about themselves and, more importantly, about the actual dynamics of the organization itself. To the extent that people feel comfortable to put issues related to the change on the table, many of the power dynamics, politics, and systems interrelationships become much clearer.  As change happens it becomes easier to address these more effectively through the change process itself and not afterwards, when it become much more difficult to modify elements of the new systems. In fact – and this may come as a surprise – it may be that the change that you are promoting can actually be improved by suggestions from those who perceive the change to be inadequate in some ways. So, on good days, resistance is a gift!!!

For the other days (when it is just a hassle), there are three “meta-strategies” to address resistance. The first of these is an information-driven strategy. It is based on the assumption that people are rational. If the right information, put forward in the right way, by the right person, at the right time, and in the right amount happens, then this strategy assumes that the recipients will engage with the information and become more accepting of the change based on the rational information supporting it. On good days this works, but frequently we human beings operate at more levels than simply cognitive understanding.

The second meta-strategy is a values or belief-driven strategy. This strategy is based on the assumption that people are driven by deeply held values or beliefs and that these must somehow be touched and integrated into the change process. The process of using this approach at its most basic level is based on the necessity to bring an individual face-to-face with something that he/she believes to be true and to have them discover that it is not true. The heart of this approach is experiential – sending them an article isn’t sufficient.

In our Change Management class at Kedge we do an exercise with Four Human Values based on some deep research that I have been involved with for the last 30 years. At the end of this 45-minute exercise, most participants are shocked by a belief that is nearly universal among managers concerning what people most want to be appreciated for in the workplace. This one simple experience has motivated more change in organizations than almost anything that I have come across. Its power is in its credible challenge to what participants believe and the associated question of what those people are going to change in their workplaces now that their belief has been contradicted. In one Canadian organization over two years we went from 17 out of 220 work units implementing change in employee involvement to 174 out of 220 units. Beliefs and values are powerful resistance levers.

The third meta-strategy is a power-driven strategy. This one we all know well. It is when the boss arrives, tells us what the change is going to be, and demands compliance. If he/she is serious (i.e. people may lost their jobs for non-compliance), then the strategy works. But it has tremendous costs if it is the only strategy. And if the boos changes, there is no guarantee that the change will continue to be implemented.

The best approach to reducing resistance is a combination of all three meta-strategies. For example, the boss tells everyone to be at a 09:00 AM Monday morning meeting. He is the boss and can direct that this happen (power-driven). The boss arrives at the meeting and spends an hour sharing the latest financial results (and they are BAD) along with his team’s strategy and the reasons behind it with the whole group (information-driven strategy). He then asks the participants to break into small groups, discuss the proposed change, and list strengths and weakness, with a particular emphasis on how the change fits for the company’s values and their own beliefs about the best way to address such situations values/belief-driven strategy).

If this meeting is run well (i.e. people feel comfortable to be truthful), then the likelihood of a successful change initiative goes up dramatically. Such a meeting also implies that new and good ideas can be incorporated into the change process as well. It also goes a long way to bring resistance out, to address it with respect, and to engage everyone in moving forward together.

And it’s tricky to pull off! In my own professional practice we have had to design specific processes to conduct such meetings – we teach many in our change management course here at Kedge – and when they work they are powerful mechanisms to reduce resistance and generate active support in change situations.

Q:  How do you analyze the impact of change and how do you define change failure?

M.M.:  The real secret to change is to BEGIN with concrete goals. This is a major problem with many change programs. They begin with soft goals and as the change program progresses, the goals evolve – we call this “goal creep” – to the extent that initial plans are incapable of final goal achievement. Great change programs begin with extremely concrete goals (e.g. a 30% reduction in production costs or an overall budget reduction of 20% or an increased Employee Satisfaction Ration  (ESR) of 30%). The best way to develop such goals is to engage all the participants in the change program in the development of the goals – and to reward achievement in concrete terms.

Change failure under such circumstances is easy to define: what was the goal and how did we do? Without clearly declared change goals, declaration of change success or failure is difficult. Once everyone has bought into change goals (and related rewards), change becomes a much easier process to manage.

I worked for three years at a Canadian petroleum company (Syncrude). We declared a change goal of a production cost of $15.60 per barrel fro $18.75 a barrel (we produced 200,000 barrel a day at that point). For every cent we saved beyond this cost, employees received 30% of savings as a bonus. It took us less than a year to get to the desired production rate and in the following quarter employees received a cheque for $5,000 per employee as a bonus based on production cost. Name the goal and reward achievement in a clear and verifiable way.

Q:  How, in your work with the Kedge Global MBA, do you build value teaching change to MBA participants?

M.M.:  I believe that many of my responses to the above questions have already answered this question. It is our goal at Kedge to expose program participants to the practical dilemmas and solutions to real-world business practices. Change is a constant in our current environment. If our graduates don’t understand the essence of change management, they will be doomed to repeat processes that yield minimal results at high cost. The competent practitioner understands both the theory and the method of core areas of practice. Understanding the three meta-strategies of change management will ensure that our graduates don’t fall in to the traps associate with mediocre change guidance. Anyone who goes through our change management course cannot leave without a profound understanding of the critical steps in the change process and the pain associated with not performing well. Our change management business simulations guarantee this.

Q:  How do you feel as a change management practitioner teaching in the Kedge MBA Program?

M.M.:  I have spent the last 30 years of my life managing and consulting to change management efforts in North America, in Europe, and in Asia. Change, for me, is like playing chess – you need to understand both the big picture (the overall board) and the details (the interests of all of the players). I used to have long fingers. They have been cut short by the many mistakes that I have made. Experience is a wonderful teacher.  It allows me now to be able to stand in front of the immense intellect of the Kedge student group and “play” with the great questions that they ask. It also allows me to, at times, humble the students with the naïve assumptions that they bring to the discussion, regardless of their experience. The Kedge program for me is an annual vacation in which I exchange complicated ideas with students who do not accept simple ideas. I look forward to future opportunities to push my own edges – the students will do that – and to push theirs in service of better change management implementation.