Companies can cope with the challenges ahead if they understand the simple rules behind how change happens.
In 1888, French chemist Henri Le Châtelier discovered a natural principle that applies when a system is in crisis. Every stable system will respond to change by trying to restore its original condition. Put another way, he deduced that any system will favour the least disruptive path.
This fundamental principle changed the course of chemistry in the 19th century. But it is not limited to the laws of thermodynamics. It describes how systems, organizations, and teams can learn to change.
Through my experience with organizations like Google, Johnson & Johnson and Coca-Cola, I found that many of today’s most prominent companies are in a permanent state of flux. Staff have shared that they feel constantly under pressure to change and adapt. A few generations ago, their predecessors would have experienced only a handful of organization-wide upheavals.
Many large organizations are hesitant to change too fast or to embrace new ways of working. They resist, giving what appears to be the most logical reason: they will grow by maintaining a successful proven pattern.
The past predicts the present and can be forecast into the future, I hear over and over again from them. Change has always followed trends. What impels a VP to change her technology tool stack or a CFO to adopt a new forecasting system is that events are driven by, and are a result of, the past. The prevailing worldview is that every event is traceable to a material cause. A leads to B. B leads to C. The past determines the present. To them, change is a linear and continuous process.
But that mindset becomes problematic, when the pace of change is accelerating and uprooting the status quo.
Today, change does not follow the rules we have previously relied on. The shortening lifespan of S&P 500 companies, the exponential pace of technological improvements and the accelerating rate of economic progress are happening at a much faster rate than ever before.
We are now living through the Fourth Industrial Revolution, in which increased globalization and digitization is bringing about greater interdependence and interconnection.
Today, change is not only more rapid, more complex, more turbulent, and more unpredictable. Today's change is unlike any change encountered before.
Change itself has changed.
Classical wisdom on how organizations can change is of little use, given today’s exponential change. The concepts, tools, and solutions that have proven so successful in the past now cause growing pains for organizations. Three-year business plans, annual budgets, top-down controls, incessant emails and meetings, and rigid policies are constraining work.
Many senior leaders get stuck in a way of working that no longer serves them. They can't figure out how to integrate the new and the different with the old and the reliable. Any notion of change is put on hold for another cycle.
Avoiding the pitfalls
Why would any executive look to change the current modus operandi? The latest project deadlines are far more important to address. This quarter's KPIs don't account for the benefits from those "new ways of working". Plans for change can wait. Any interference with how the organization works may breed a natural resistance to change. Whether consciously or unconsciously, this can sabotage solutions, as we have witnessed time and again across projects.
In our experience, many organizations and teams undermine their own best intentions, preserving beliefs that perpetuate the status quo.
Today’s challenges require far more than what can be accomplished with the latest gimmick or textbook technique. Organizations must transform their whole operating model into one that constantly (re)designs itself.
This new mindset requires adopting entirely new practices and abandoning a body of accumulated historical wisdom specific to your company or industry.
A deeper understanding of key principles and rules about how to change organizations and teams can make it last.
From my experience, three simple rules pay dividends when adopted across several teams.
Results have shown that these rules have a critical effect on how teams work. They enable organizations to coordinate projects and workstreams, in a way that advances its work.
On one hand, adopting these rules drastically reduces the time employees need to share information and communicate. They dedicate less time to catching up and more time to working. Trending tools like Slack, Trello, Google Drive and others have created a means for every type of collaboration.
On the other hand, these rules also help the organization decentralize decision-making, based on the risk and complexity of the decisions at stake. This empowers more junior employees to make decisions, which bolsters their confidence and gives them a sense of ownership.
These simple rules are not self-evident. Adopting them will not lead to instant results within your team or organization. Rather, they are best used as guiding principles to prompt senior leaders and teams to test new structures that can eventually lead to a change in behavior.
1. Continuous participatory change for all
Successful case studies across different industries, regions, and company sizes prove that any part of an organization has the agency to form, un-form, and re-form as often or as little as it needs to function well. New data can emerge and new experiments can yield results. Team members can bring forward challenges in specific meetings to help unblock whatever is obstructing them from delivering on the organization's purpose.
Teams that adopt continuous participatory governance habits continually and rapidly “probe-sense-respond”. They use bold and forceful hunches to help them both define and influence a problem towards an agreeable solution.
This has vital implications for change management and strategy. The first is that analysis cannot precede action. The problem and solution evolve together. The only intelligent way to move forward through uncertainty is through forming a hunch, experimenting and testing creative hypotheses. The second is that the pain and difficulty of changing are greatly reduced through smaller, safe-to-try adjustments.
This is a method and vision for how to proceed in complex, uncertain and dynamic environments.
For a deeper dive, see this whitepaper on continuous participatory reorganization.
2. Separate complex systems from complicated ones
What does complexity mean and how does a complex system change?
When asked what separates a complicated system from a complex system, most senior leaders give the same answer - that complex and complicated are interchangeable terms. Not true.
Complex adaptive systems and complicated systems may look the same, but the way they evolve and interact with the environment around them is different.
Complicated systems like your wristwatch, car engine or computer software have many parts and causal loops. Any expert can ultimately understand how to handle them with the right knowledge. Changing the balance spring, meddling with the piston or inserting a new line of code will yield a clear outcome. Each input is traceable to an output as a result of it.
Complex adaptive systems like cities, the weather, or the morning rush hour are dispositional systems. They have many agents, inputs, and interdependencies, any adjustment of which can lead to chaos.
Have you read?
Complex things can be adjusted, irritated and studied, but you can't understand why something is happening and how. You certainly can't predict with accuracy how they will react to a certain kind of input, as you could for a complicated system.
Organizations are complex systems, most leaders would agree after reading the above. Yet we continue to behave, design, interact and change our organizations as if they were complicated.
We treat them as linear things that will lead to linear results.
The idea that a chief executive at any large company has control over what's going to happen or occur at the edges is partially incorrect.
Leadership in complex systems means being open to experimentation: testing new ideas; reflecting on what happens; learning as a team; letting the organization learn; and eventually adapting.
The beautiful thing about how a complex system works is that it can become highly adaptive, fast-learning and responsive to its environment.
We need to remember this distinction between the complicated and complex, and better use it to approach how we change organizations. It is particularly relevant as we reinvent and repurpose different teams, workstreams and individuals.
For a vivid discussion on the topic, watch this Deutsche Telecom talk by Niels Pflaeging.
3. Default to open communication, mostly on digital channels
Most of our clients default to email. This means that discussing work, workflow management, document sharing and collaboration all happen on the same platform. Email management becomes a common task consuming hours of the workday and beyond. In the meantime, project deadlines get pushed and employees feel the strain and the pressure of an instant response. Inbox zero becomes the holy grail in a process that distracts our focus from our actual work.
Open information flow and asynchronous communication is fundamental to a dynamic team that can respond to needs and issues as they arise. Moving teams away from email and onto fit-for-purpose platforms can enable a more effective communication.
It means that you don't have to drop everything to get on a call or go to a meeting. Video conferencing, channel based-conversations, project management and tracking become your "go-to".
In our experience, you can accomplish this remaining within the confine of your organization's IT security system by using some of the current platforms powering your operating rhythm (Office365, SAP, Salesforce, Oracle, IBM, etc.)
Improving how you share information and communicate can help you escape the email pit and create good organizational hygiene for today's pace of change.
For a more extensive discussion on tooling today’s organization, see this article by Spencer Pitman.
Have you read?
In my experience, many organizations have put into practice some form of the three rules above to navigate change with some degree of success. See the stories shared by Favi, Buurtzorg, Netflix, Zappos, SEMCO, Spotify, Patagonia, Morningstar, HAIER, and many others.
Change induces fear in us all. A fear of the unknown, of failure, of not being needed in the new order of things.
Yet until we make the leap, the prospect of changing our organizations will remain daunting. These three rules can keep us grounded and help us feel our way forward amid the uncertainty.
The view expressed in this article are those of the author alone and not of The Ready.