We’re Playing a New Game

The field of organizational development was conceived by behavioral scientists as a way of helping organizations introduce planned change. Changes to work practices, strategy, organizational design, mergers and acquisitions, and so forth were too often resisted by those whose help was required for them to succeed. Kurt Lewin, the most widely recognized progenitor of the field, in the 1940s and ’50s laid out the basics of what became the backbone for change work in organizations. His model was simple and intuitive. It called for leaders to (1) “unfreeze” the organization by clarifying the need for change; (2) introduce change using highly participative methods that allowed others to see for themselves the logic and necessity of change and even to contribute to the design of the change itself; and (3) “refreeze” the organization by institutionalizing new ways of working through the adoption of new methods, policies, and procedures that would not allow it to relapse into comfortable but ineffective ways of operating.

Later others added to Lewin’s three steps. It was recognized, for example, that before the leader could help others change, the leader himself had to be committed to the change. If a leader refused to acknowledge the clear need for change, engaging him in learning about the threats or sharing with him the results of careful diagnoses could increase his readiness to act.

If a leader had difficulty getting her staff on board with the change, techniques were developed to understand people’s concerns and address them. Using surveys to gather opinions and then summarizing the data so that it could be discussed by leaders and employees in a search for solutions became an extremely popular approach. In other cases, when the implementation of good ideas failed to happen, reward systems were realigned to provide incentives for desired new behaviors. Over the years literally hundreds of techniques and approaches for managing change were invented, ranging from individual coaching to large-scale interventions involving thousands of people simultaneously. Despite the proliferation of approaches to managing change, the planned change success rate has remained stuck at around 30 to 40 percent.

John Kotter’s eight-step model, introduced in 1996, became the most widely cited roadmap for changing organizations:

1. Increase urgency.

2. Build the guiding coalition.

3. Get the vision right.

4. Communicate for buy-in.

5. Empower action.

6. Create short-term wins.

7. Don’t let up.

8. Make change stick.

Kotter’s approach followed Lewin’s basic framework, which is premised on a linear notion of how single changes occur.

But at about the same time that Kotter’s model was published, others were questioning whether Lewin’s linear, single-focused thinking could still be applied successfully to the world we live in today. Peter Vaill was among the first and most vocal to articulate this alternative point of view. His 1989 book, Managing as a Performing Art: New Ideas for a World of Chaotic Change, struck a chord with beleaguered managers who could not keep up with the changes occurring around them. Just as one change was introduced, another was needed, and often that change required undoing something the previous change had accomplished. Under these circumstances orderly steps and one-at-a-time sequential changes went out the window. One explanation for why all the tools and techniques that were devised to help with change were not actually helping is that there was simply too much change going on. Tools designed to manage one change at a time could not keep up with the constant interruptions that came from the need to change course continuously.

What Vaill called “permanent whitewater” we refer to here as complex, continuous change, that is, a series of overlapping, never-ending, planned and unplanned changes that are interdependent, difficult to execute, and either cannot or should not be ignored. Organizations facing triple-C can reach the point of change saturation in which the many important changes that must be undertaken can no longer be addressed through parallel, linear, sequential change efforts. Changes start falling off the plate because there are not enough resources to address them, and organizational performance suffers as more effort is put into transformation and less is left over to support ongoing operations. What is a leader living in a world of complex, continuous change to do?

Recently, at a conference that addressed the topic of change, Kotter made the statement that a new approach to change was needed to keep up with the pace and complexity of change that we are experiencing. He said that while his model still makes sense when we focus on a single-change effort, as the pace and complexity of change exceeds our capacity to respond effectively, a new approach to change must be invented. We are playing a new game.

One idea that has been suggested is to take Lewin’s ideas around involvement a step further and get everyone involved in making change happen rather than leading change from the top. The theory is that by getting more people involved, there would be greater shared understanding of what should happen, fewer up and down the hierarchy meetings needed to clarify things, and more hands on deck who are committed to assist. Further, there would be greater buy-in and fewer conflicts due to one part of the organization’s fighting with another about the direction of change. Marvin Weisbord, in his 1987 book Productive Workplaces, laid out the tenets for an approach to change that “got the whole system in the room.” Building on the earlier work of Fred Emery and Eric Trist on “search conferences,” the idea was to eliminate the “strategizing at the top and execution at the bottom” that often leads to change failures. While these ways of managing complex, continuous change were a step forward, they were not entirely successful. It turns out that it’s easier to get the whole system into a room than to get the whole system to do something after people leave the room.

These whole-system or “large-group” interventions, including popular variations like the appreciative inquiry summits and the world café, are sometimes run as onetime, single-focus events. They can also be repeated over time and in different parts of an organization or system. Using these methods, change leaders have discovered that they can indeed get more people in the room to increase understanding of the whole system before they target specific changes to be made. They also discovered, however, that follow-through from whole-system events is a challenge and that only rarely do these discrete events build upon one another to produce continuous adaptation. Even with many people involved, our single, linear interventions are simply not agile enough to deal with the many complex changes we are facing. Nor can we do them frequently enough to keep up with the pace of change around us.

Another suggestion that has been offered is to devote attention to one key change effort at a time. There are success stories of narrowly focused sustained linear change programs, and we should not overlook them because they inform us of conditions that are required to achieve footholds as we climb toward higher levels of organizational performance. The Work-Out program developed by General Electric (GE) that brought people from a unit together to identify and eliminate unnecessary tasks, the high-performance manufacturing systems of Procter & Gamble (P&G) that relied on people’s becoming more skilled and making more operational decisions for themselves, and Toyota’s lean manufacturing system that eliminated inventory and controlled for quality—all are examples of effective focused-change efforts that stuck for more than a decade.

Clear sustained leadership, commitment to a common underlying approach, and many internal change agents trained in the same methodology are hallmarks of these efforts. Each of these focused programs addressed an important challenge but certainly not all the challenges that these organizations were facing. It could even be argued that placing too much effort into a single-change program detracted from paying attention to other important changes that should have been taking place. GE, P&G, and Toyota knew very well that to become agile they needed more than a single signature program. The successful completion of any single program does not mean that the need for change is sated. Instead we simply must move past a series of one-shot interventions and embrace the need for continuous change without overwhelming ourselves and losing control.

The “over time” part of change is especially challenging. In a world of complex, continuous change, making changes stick is difficult and perhaps not even the right thing to do. Factors that threaten the sustainability of change efforts include leadership turnover, strategic combinations (takeovers, mergers, acquisitions), competitive challenges, burnout, resistance, and failure to demonstrate compelling outcomes. Making and sustaining change in the face of these forces is not easy. No wonder our success rate for single planned-change efforts remains around 30 percent.

If we try to undertake multiple change efforts simultaneously using an approach designed for single changes, doing everything that is required and keeping our efforts coordinated becomes more challenging. We jump from one change effort to another before we complete the first. We change directions, waste time and resources, and fall further behind. We are playing a new game, and we need new ways to play it.

More Important Than Ever, but Still Struggling to Succeed

Three things make the changes organizations face today different from those of even two decades ago. First, the speed with which change is occurring is increasing, largely due to the second factor, which is the influence of technology on nearly every aspect of doing business. The third factor is globalization, which has arrived and is making standing pat an almost certain recipe for obsolescence. The most dramatic changes show up in two key areas: mergers and business failure rates. The turnover of companies in the Fortune 500 has been thoroughly documented.Even large, powerful institutions are dropping from the scene at alarming rates. Many of them succumb to acquisitions, which themselves are documented by independent studies performed by McKinsey and KPMG to fail two-thirds of the time. Specifically, these reports cited “soft issues,” such as selecting the right leadership team for the combined entity, resolving cultural issues, and communicating effectively, as key to success but frequently overlooked.

There is a natural evolution of business that makes some competitors less viable, leading to their replacement by younger, stronger firms. Should American Motors have been bailed out by the US government as General Motors (GM) was decades later? What about bailouts for TWA and Braniff airlines? Many would say no; these companies were past their prime and should have been allowed to perish, as they would have needed continuous propping up in the face of growing competition from Toyota, British Airways, and others. Yet the view from inside was undoubtedly different. While paddling against the current, did these companies have fatal flaws, or were they simply incapable of making the changes required to evolve? Certainly, when investors lose faith, little can be done. But what separates a Packard from a GM, or a Swissair from a Virgin Atlantic? At some point in their evolution, they had roughly equal prospects. Without a crystal ball, you would not have known which stock to buy for your retirement portfolio. And yet some of these classic competitors survived while others did not. One possible explanation is that some of these companies were better than others at dealing with change.

The passage of time has not made things simpler. If anything, the competitive environment has become even more challenging—faster, more technology driven, and increasingly global. As China, India, and Brazil become increasingly business-savvy, it will take more innovation and change for others to adopt effective counterstrategies. After facing decades of low labor costs, rapid duplication of technological advances, and government support for business expansion from these competitors, firms in the United States and Europe have been challenged to improve their operations in every respect. If there ever was enough time to sit back and figure things out from within the walls of an impenetrable castle, there certainly is not now.

So, while the speed and scope of global, technology-fueled change has increased, our ability to respond has not. More-complex and demanding changes, like merger integration, installing enterprise resource planning (ERP) systems, and venturing into global expansion, have high failure rates, even among some of our best companies. As change has become more critical and complex, many companies are still struggling to find the right approaches to ensure positive outcomes. This should be a wake-up call to all of us. We need to get better at leading complex, continuous change, and we need to do so as quickly as we can.