6th in a Series on Change: Economic vs. Organizational Approaches to Change by Beer & Nohria

Continuing my exploration of HBR’s Change Management Must Reads, I relished the taoistic a-ha of Beer & Nohria’s article, Cracking the Code of Change which introduces this idea of Theory (E)conomic and (O)rganizational approaches to change and a discussion of how to best manage this tension. 

Theory E change is hard approach driven by shareholder returns and characterized by economic incentives and organizational restructuring. 

Theory O change is a soft approach driven by cultural & capability development through learning, teamwork and communication. When this approach is used it is usually out of a long held commitment to employees. 

The US favors E while the EU and Asia tend to favor O, or so generalizes the authors. 

In the case of entrepreneurs, the authors suggest that entrepreneurs can be classified as driven by cash out (E) or culture building (O). 

You see the taoistic interplay of opposing forces here already, yes? You also discern the tension between the needs to be loyal to shareholders and employees.

In reality, all companies must use a mix of these approaches. The trick is to balance these to fit the context leadership teams finds themselves in, and to do so avoiding the confusing perception of being "nurturing cutthroats”. 

The authors suggests two approaches to E/O execution, sequencing and simultaneous. 

Sequencing is an approach for mixing these approaches over time, and with requisite storytelling to assure that all affected are aware of where in the E/O cycle the organizational culture is operating towards a longer term change objective. It seems that such sequencing would allow a critical mass of focus on one approach to another at any given time with out sacrificing the benefits of either approach over time. The authors suggest that E be sequenced before O as the reverse carries too great a price of employee disaffection. This said, sequencing has the disadvantages of taking a long time and possibly across multiple leadership regimes.

Given these disadvantages of sequencing, the authors offer a faster but riskier and potentially more successful, approach of simultaneous E/O action which requires:

1. embracing this paradox in goal setting
2. setting direction from above while engaging from below so that command and control play well with the grassroots. (Sounds like a Battle of the Bands.)
3. focusing simultaneously on the hard and soft elements of change though in proper sequence
4. allowing & rewarding experimentation & evolution
5. rewarding people to reinforce, not drive, change

These simultaneous dynamics, managed well, result in an environment of candor, listening, debating and learning which has a better chance of building trust & commitment to change. 

This article so resonated with me as it described this tension of opposites, and management of a middle way, which has often been hidden in plain sight throughout my career as a change leader. It provides an orderly paradigm to so many seemingly chaotic regimes I have witnessed and been a part of. Fortunately, such blindness has not killed all success and leave me looking forward to even more success in the future now I am educated. 

As an after note, I see how these approaches are applicable not only to organizations but also to individuals having applications for my leadership development as well as that of my leadership coaching. 

I hope this "taoistic" a-ha is as helpful to you and your ongoing change activities as it was for me. 

3rd in a Series on Change Management: Why People Won't Change

In my reading of the Harvard Business Review article, The "Real Reason People Won’t Change” by Kegan & Lahey, I came across this concept of “change immunity”. The insight is that "commitment conflict? is why people resist and even fights change. It is less that they are fighting change than that they are being true to their current commitments. Can’t blame people for that. In fact you can even respect them for it. That said, such immunity can cause damage when change is resisted in lieu of the obsolete status quo. By the way, a "competing commitment" is a subconscious hidden goal that conflicts with stated commitments. 

For me this is a new insight and a caution not to take other’s resistance to change personally. This is not about me. It really is about them and their commitment. This new insight accepted, the question becomes what can be done about it. The authors espouse a challenging 3 step process that can be used to overcome “change immunity”. Here is a summation of it and please read the article for better details.

1) Diagnose the Competing Commitment where there is an examination of: a) the change we state we want, b) the commitment required  to realize the stated change, c) the undermining behaviors that are disabling the stated change, d) an imagining of performing the  commitment (from b) along with an observation of the thinking, (uncomfortable) feeling & actions this calls up, and e) an examination of the worrisome outcome we are working to prevent when we engage in undermining behaviors. This “aha” insight contains the "BIG Assumption".  

2) Identify the Big Assumption, that generates our competing commitment. Do so by creating a sentence which inverts the competing commitment and reveals what we are really afraid of. For instance, I have a commitment to publish a book and on doing this exercise realize that publishing a book conflicts with my commitment to assuring that I do not make a “public" mistake. This explains why the book is still not published. Realization of this assumption helps as knowing what my conflicting commitment is, I can better choose to choose a more important commitment. Big assumptions are so difficult to identify and forsake because they “create a disarming and deluding sense of certainty”, and certainty is where its at, until its not. 

3) Test & Replace the Big Assumption where one confirms, via direct experience, how much their Big Assumption is unconsciously controlling their behavior, and deliberately plans alternate behavior which support their stated commitment.

The author further makes the point that groups are as susceptible to commitment conflict as individuals. As you can imagine, getting individuals to work through this process is tough enough so getting groups through it is exponentially grueling, but fortunately not impossible.

To lend proper perspective, the author notes that this process takes several hours to work through and a long time to ultimately act on in terms of reversing the undermining behaviors which support the status quo.

The author acknowledges that “bringing these issues to the surface  and confronting them head-on is challenging and painful-yet tremendously effective. Ultimately this process is about "understanding the complexities of people’s behavior, guiding them through a productive process to bring their competing commitments to the surface, and helping them cope with the inner conflict that is preventing them from achieving their goals.”

Good stuff and goodness help us in applying it for ourselves and our organizations.