August 16, 2019
By Sherrie Haynie
If Heraclitus could see the current business landscape, he might view his famous “change is the only constant in life” quote as an understatement. Not only is the pace of change in the business world fast, but it appears to be getting faster. In 1955, the average life expectancy of an organization was 75 years. Now it’s been calculated as less than 15. One study even claims that an eerie 52% of Fortune 500 companies have disappeared since 2000. In a world where “disruptive” is considered the ultimate accolade, big companies now come and go fairly quickly. Airbnb, Uber, Tesla and Amazon were all unheard of not long ago, yet today they out-compete, and in some cases, completely replace major established institutions.
Given this climate, one of the most important questions that any company can ask is “How do we approach change management?”
The Anatomy Of An Agile Organization
As it turns out, the companies that are most successful in terms of managing change have a few things in common:
They treat their people as an asset rather than an expense.
In days past, people were treated as costs. But agile companies understand that their people are what give them the ability to adapt to disruptive market forces and continually offer training and opportunities for development.
They’ve moved toward flat-structured management.
These companies have fundamentally changed how they approach policies for communication, authority and responsibility, shifting from more of a hierarchical model to one with fewer levels of middle management. Google, for example, has one supervisor for every 50 people.
They are diverse and mission-driven.
Traditionally, people have been siloed in departments. But companies that remain agile in the face of change are highly cross-functional, with employees coming together on teams for projects with specific purposes then moving on to other teams when the project is completed or as priorities change.
They embody transformational leadership.
In the past, leadership tended to be transactional. It focused on achieving compliance with company objectives through rewards and punishment — the "quid pro quo" approach. Successful companies, however, are replacing this rather short-sighted leadership style with a transformational approach that inspires employees by creating a vision and mission.
As a case in point, ANZ Banking Group has restructured into teams of 10, called “tribes" and replaced the typical "manager" function with coaches. The move is inspired by Spotify, one of the pioneers in agile software development, an iterative approach where solutions evolve through collaboration between self-organizing cross-functional teams. Instead of trying to hire good "bean counters," they’re hiring people with the ability to adapt and work collaboratively. This stands in stark contrast to the “waterfall” approach where teams are given a fairly rigid set of objectives and work to accomplish them, come hell or high water.
We’re Getting A Lot Right, But Something Is Missing
Companies, in general, are doing lots of things right, and we’ve seen across-the-board improvements in the ability to:
- Identify roles and responsibilities
- Manage knowledge and capabilities
- Introduce changes to structure, systems and technologies
- Account for the external environment more effectively
- Identify specific missions and goals
However, it’s somewhat surprising (and a little sad) that so many organizational change initiatives fail or don’t result in sustained change. Why is this the case? Despite these advances, companies still don’t know a lot about organizational culture. True, everyone knows that it exists and that it’s certainly important. But understanding how to define and adjust organizational culture is another matter.
Additionally, studies indicate that companies are just beginning to understand employee engagement or the level of an employee's commitment and connection to their work and to their organization. How can companies address what seems at the outset to be fairly nebulous concepts?
Gaining A Measure Of Control Over Change
Much of what drives change in business is outside of our control, but if companies begin with a concerted effort to better understand the people that make up their companies — their best asset for change — they can much more readily adjust to disruptive forces in the marketplace.
One way to approach these is to layer assessments onto a change process, starting with understanding preferences, then moving into interpersonal needs, followed by personality and interests, then emotional cognitive intelligence and finally completing the loop with 360 feedback. This can provide a solid understanding that sheds light on culture and engagement, pinpointing areas that need to be or can be adjusted to optimize for change.
Contrary to conventional wisdom, people don’t dislike change; if we did, it’s unlikely that we would have arrived at where we are today. But the better we understand ourselves, the better we are able to cope with both welcome and unwelcome change. Companies, it turns out, are no different.