What 21st century company should know about change management!

"In the introduction to my last post I mentioned an article I had read from the latest edition of Reader's Digest by management guru Belden Menkus a former employee at management consultancy powerhouse Mc Kinsey about Change Management. Hope you enjoy it and leave a few comments about how you think change should be implemented within organizations today"

Remember when a change was as good as a rest? When life stayed pretty much the same, year in, year out? Back then, if you wanted to perk things up a bit, you’d just shift a few elements around—maybe have a break or take up a hobby. But these days it feels as if life is in a constant state of change, with very little staying as it was. The last thing you probably need is yet more change.

What’s more, because so many things are changing at the same time, they often combine in unexpected ways. Who’d have thought, for example, that steps taken by governments to promote home ownerships, and businesses offering ways to make that affordable, would lead to financial meltdown, the credit crunch and the nationalisation of major banks?

Or that an ash from an Icelandic volcano most of us had never heard of would cause the Europe-wide disruption to everything from food exports to taxi services?

Or that Apple, once just a computer manufacturer would become a major player in the music business, mobile phones, and now e-readers—all in just a few years.

These are examples of what I call the Age of Discontinuity; when what happens next feels almost disconnected from what has gone before.

As a result, the future seems increasingly unpredictable. This can create problems for businesses—lost opportunities, misguided investments—which is why so many of them, big and small, are wrestling with the issues. But how did we get to this point?

The Age of stability: 1920s-early 1960s

For businesses, this was a slower, simpler time. Business was mainly local, because life was local. Information processing tools—from typewriters to adding machines—were mechanical. Record keeping and communications were largely paper-based: letters, newspapers, memos, forms, files. It was a time when someone could have fallen asleep at their desk for two decades and woken up to find that the way business was done hadn’t changed much.

The Age of change: mid-60s – early 1980s

Somewhere around the mid 1960s, things shifted. Computers and photocopiers became widespread, making it faster, easier and cheaper to create, manipulated and communicate information. Business leaders had to deal with social change and shifting values. Japan and other countries, started to make their presence felt in the global economy, not just as sources of raw materials and cheap labours but as competitors and innovators, too. At the same time—both driving and driven by these changes—came academic theories about strategy, organization, and change itself: theories that in many cases are still influencing how businesses operate.

The Age of Acceleration: Mid-80s – early 2000s

By the mid-1980s, change—once difficult and time-consuming—had become easier: something we knew how to do and did all the time. Computer no longer remote, were now on your desk and in your home. Mobile phones broke the link between work and workplace. Mass containerisation of shipping and road transport made fast global supply chains possible. New business models—such as First Direct’s online banking—started to bypass traditional methods of sales and distribution. Not surprisingly more new theories arose to address the new challenges—and again many are still in use today.

The Age of Discontinuity: mid-00s – now

More recently, things shifted again—with the internet at the centre of the change. For many people, a laptop has become where they work, much more than any other physical place. The Internet is also where more and more of us shop, learn and interact. Thanks to Broadband access, we can now become “experts” in medicine, law, culture, and politics. Innovations such as the IPod have changed how we acquire, use, and pay for music and other entertainment. Meanwhile, globalisation continues, as China and India become major players in the world economy. The recent financial meltdown demonstrates how rapidly things change and what an unpredictable world we live in.

So where do we go from here?

Most current middle managers started work in the age of acceleration and most senior leaders started in the age of change—but the organisations they joined were often built on practices from the age of stability! Many management patterns established in all these periods are still in use today. But the challenges of the age of Discontinuity are very different, and very different approaches are needed.

Update your mind models

Everyone has a “mind model” of how the world works, which we create from what we see around us and what people, tell us. We can’t often explain the model to others and rarely question it ourselves. Yet every day, we make decisions based on it, usually without much conscious thought.

In a time when things didn’t change, this wasn’t a problem. Now our thinking can soon become out of date. Most of us, for instance can recall when photographic evidence was conclusive enough to convict. But now that we know how easy it is to manipulate photos, a “seeing is believing” mind model is out of date.

Or take a straightforward business example. I once worked with some clients who wanted new customers for their core product. They believed they made most of their money from that product, and everything else they sold had been introduced to keep core customers happy, rather than to make money. But when the market took a downturn, we took a hard look at where their profits really came from. It turned out very few were from the core products, and most were from the add-ons. They’ve now shifted their focus.

In earlier times, businesses could survive with a top team that didn’t examine whether their mind models matched reality. Things changed slowly enough to allow these models to be updated in the same way they’d been constructed in the first place: bit by bit.

But that drip-feed approach will no longer work. Businesses need once clear, up-to-date view of the world—which means re-examining their approach and seeing where it needs refreshing.

Create new meaning

“Meaning” might sound a bit fluffy, but it’s vital for making sense of what’s happening. Many businesses have some sort of mission statement, which is meant to create a sense of purpose of the organisation as a whole. But a different level of meaning is needed in today’s uncertain times.

It’s what I call “Us, plus”, and it’s more manifesto than mission statement: “The world is this way, but it could be that way, which is better, so we’re going to help make it that way. Oh, and we think can make some money while we’re doing so. We’re doing something valuable, so we ought to get rewarded”

In fact when old certainties are breaking down, creating new meaning is the key to leadership. With it, employees, customers and suppliers will be engaged and supportive—even when mistakes happen. Without it, a business can end up like BP: attacked by politicians and public because it’s seen as having focussed on profit at the expense of the bigger picture.

Be quick on your feet

Businesses won’t survive if they can’t respond to a fast changing world. Yet most use an inherently slow approach. Management ask a small group to figure out what to do (usually in secret). Sometime later, they hear the recommendations and decide what to do. They then tell the staff.

If you’ve ever been in an organization that’s had consultants in, you know how it works: months of data-gathering and huge reports, before the answer is communicated from on high. But employees often resist change if they haven’t been part of developing the solution. Besides, information often now often changes faster than it can be gathered and analysed.

Some business leaders are using better approaches. They accept that you can’t analyse everything. They involve more people inside their company. They reach out to anyone, anywhere, who can help identify workable solutions and move them forward.

In today’s world, you don’t have the luxury of figuring it all out first, then implementing the answer. In the age of Discontinuity, an agile, open mind is the biggest asset of all.

1. Belden Menkus has advised business leaders around the world for 25 years
2. Republished from the January 2011 edition of the Reader's Digest (page 131-136)