Why change management often fails

Responsive organizations are better able to adapt successfully or anticipate developments in their environment. If you want build such an organization, it is important to understand why conventional change management often fails, as we discussed in one of our other blogs.

Organize for succes
In many change projects, companies do not organize well enough for success. By that we do not mean organization charts, KPI’s, reporting lines or meeting schedules. These are usually well in place. Maybe sometimes a little too much.

Many companies do not adequately tap into the human ability to change.

No, we mean that the plans take insufficient account of people and their  relationships. For example: are people energized by the company’s strategy or change plan? Does everyone do what he or she wants to do – and does that match their abilities? Is there sufficient agreement – or ‘buy-in’ – on the goals and priorities? Is there enough focus, or is the number of priorities so great that no focus is possible? And do the teams involved have sufficient capacity to realize the change? 

Common sense tells us, that agreement, focus and capacity are prerequisites for successful change. And it is clear that, when these factors are not addressed well in the process there will be too much friction. Friction exists within organizations as well as between organizations and their environment. A certain amount of friction is good – it leads to resolutions and innovations. But too much of it creates resistance, frustration and lack of progress. This is the case in the far majority of change initiatives. It prevents companies to tap into the human ability to (contribute to) change.

Understand blockages to change
This was demonstrated by the Artificial Intelligence specialists of Praioritize, led by Dr. J.M. van de Poll (See: van de Poll, J. M. (2018). Ambition patterns in strategic decision-making). They have conducted a global study among more than 4.000 teams. Part of the study was to find out how teams score on the factors of agreement, focus and capacity to change. The results are quite revealing.

On the one hand the study measured the agreement among the teams of the respondents with regard to their priorities (from low to high). On the other hand the study measured the teams’ agreement with the objectives that were set by upper management (low to high):

Most teams have insufficient agreement on priorities

Seventy percent of the 4.000 teams does not agree with the company’s objectives (!), and 40% of the teams do not agree among themselves. How will that bring about coherence in the organization?

Another factor that was measured was the ambition or focus level of the teams. For this, the study looked at the number of priorities the team wanted to improve (the width of improvement) and by how much they wanted to improve them (the depth). Again, the results of the study offer a surprising insight:

Most teams choose too many priorities in change projects

Only 3% the teams have a clear overview of a limited number of improvement points that they want to improve significantly – on the road to progress. The other 97% of teams either pile too much on their plate – wanting to improve too much at the same time or they have no ambition (improve a few points just a little).

An organization could agree on highly ambitious objectives, but what if the organization is not up to the required effort? The next image illustrates that only in 20% of the teams, the team can easily meet the required effort. In the other 80%, the effort is either (too) high or unevenly distributed among team member:

The effort required for teams is usually (too) high, or not evenly distributed among team members

Last but certainly not least: we could all agree that there must be capacity to change in the team. Capacity can be defined along two dimensions: two what extent are people working on non-priorities and to what extent are they already scoring the objective on actual priorities? As with agreement, focus and effort, the research has revealed that the majority of teams has the tendency to ‘bite off more than they can chew’:

Capacity is another factor in change management that is generally overlooked

Take the basics into account…
Change is hard when there is lack of consensus and lack of focus. It is also hard when there is consensus and focus, but the required effort is unevenly divided among the team or does not match the capacity of the organization at all. As the results of the Praioritize study demonstrate, the far majority of change programs start off at the wrong foot and fail to take into account the basic managerial factors that enable organizations to move as one and accomplish change for the better. 

Inspire change. Don’t manage it.

As an executive or entrepreneur you want to adapt your company to a changing environment. Ideally you anticipate change, to create an advantage over your competitors. For this you want to get your organization moving. It would be great if this motion is effortless: everyone works together seamlessly and does what needs to be done. The organization is so well connected with its environment that change actually takes place automatically, it is inherent in your organization. In other words: the organization is responsive.

It appears, however, that most companies have a limited capability to change successfully. Do we understand why that is?

Managing change is difficult
Why is it, for example, that about 70% of the planned transformation programs in businesses do not achieve their goals or simply fail? Why do between 70 and 90% of all mergers and acquisitions fail? How come that so many companies have a great marketing plan, but in practice hardly succeed in standing out from the competition? Why do so many tenders – ICT projects, infrastructure, etc. – run out of the budgeted time and costs? Why are stress and burnouts within companies such a big problem nowadays? All these problems have a common denominator: managing change turns out to be more difficult than expected.

…and cumbersome
In an article in the Harvard Business Review publication ‘10 Must Reads On Change Management’, the now retired Harvard Professor John Paul Kotter, who has studied over one hundred transformation processes, shares his lessons learnt. The following is a quote from his article ‘Leading Change’:

“…the change process goes through a series of [eight] phases that, in total, usually require a considerable length of time. Skipping steps creates only the illusion of speed and never produces a satisfying result...[…]…critical mistakes in any of the phases can have a devastating impact, slowing momentum and negating hard-won gains…[…]…even very capable people often make at least one big error.

In other words: successful change management is hardly feasible. And the numbers above support the notion that successful change management is rare.

Organize for success
This is because, in many cases companies do not organize for success. By that we do not mean organization charts, KPI’s, reporting lines or meeting schedules. These are usually well in place. Maybe sometimes a little too much.

No, we mean that the plans take insufficient account of people and their  relationships. For example: are people energized by the company’s strategy or change plan? Does everyone do what he or she wants to do – and does that match their abilities? Is there sufficient agreement on the goals and priorities – both within teams and between teams and managers? Is there enough focus, or is the number of priorities so great that no focus is possible? And do the teams involved have sufficient capacity to realize the change?

In one of our earlier blogs we have shed some light on this. For example, 70% of teams involved in change processes do not agree with their management on the objectives or priorities. Over 60% of teams have to deal with too many objectives and priorities – either giving them a sense that their ambitions are not realistic or not focused. In the article we have described other (scientifically researched) factors which deal with people, their interactions and relationships. The results clarify that these factors are often overlooked in the scheme of things, creating unnecessary friction that hampers the realization of ambitions.

Responsive organizations adapt organically because people are inspired to contribute to change, not because they are ‘managed’ to.

The ability to change is an organizational skill
The ability to change is a skill that is already present in the people of your organization. Too much friction diminishes that ability. A good fit between people increases this ability to change. 

What if you create the conditions that make your organization change and grow from the inside-out?

The point is to create the right conditions in your organization so that people are triggered to take action. And move together towards the company goals. This is what inspires change. It then is initiated from within and not imposed by a management program. Wouldn’t that be much more fun and effective? 

Why is a responsive organization necessary?

The way many companies are managed and organized is based on management models developed from the mid-20th century. Those models are, in turn, based on organizational development during the industrial revolution. In the traditional management view, a strategy is established by the management of the organization and the organization then implements this strategy.

The strategy becomes a multi-year plan and is divided into clear sections of a month or a quarter, so that the results can be used to regularly check whether the company is still on track.

Management in a predictable world

If the results are not satisfactory, the operation is adjusted to realize the strategy. Perhaps people need to be replaced, we need to talk to suppliers again, review the organizational structure…

What such organizational models, often implicitly, assume is that the strategy is correct. If the results are not according to plan, the implementation must be adjusted.

Direct & Control
We could call this the “Direct & Control” system: the strategy is determined by the board. The organization is instructed and periodically checked whether the implementation of the strategy is going according to plan.

This way of organizing will encounter few problems, as long as the economy and the markets in which your company operates develop and grow predictably. If there are not too many “disruptive” events, you compete with your competitors for the favor of your customers. A fun and exciting game.

Why this is no longer sufficient
Our world is in motion on all fronts, probably more intense, fiercer and more global than ever: geopolitical dynamics, (macro)economic unpredictability and global events (pandemics, terrorism) challenge companies to find answers to new issues and dilemmas. Many sectors are disrupted because new competitors can operate smarter, faster, more agile and cheaper with the help of technology.

Companies need to mobilize all their capabilities and creativity to anticipate these changes and realize their ambitions. This requires more self-management in operations. Because traditionally managed organizations make little or no use of this ability, they are less able to respond quickly and in a timely manner, let alone anticipate, in the complex dynamics of strategic issues that confront them.

From “Direct & Control” to “Sense & Respond”
In responsive organizations, change takes place in an organic way. For them, the strategy is not the unshakable plan to be executed by the organization. Steve Jobs, the legendary founder of Apple, spoke about this when he said, “It doesn’t make sense to hire smart people and then tell them what to to , We hire smart people so they can tell us what to do.”

Responsive organizations are better capable of responding to developments and events

Responsive organizations are highly aware of their potential and have a convincing vision and powerful ambition. Their way of organizing and managing ensures that employees are inspired to get moving and shape developments together. The interaction of people in these organizations is more important than the plans. Operation and strategy are closely intertwined and the connection between people is stronger. Autonomy is invested as low as possible in the organization.

As a result, responsive organizations are better able to anticipate and respond to developments and events in their environment. They are more sensitive to them and use more creativity to solve their problems. As a result, they learn, develop and grow faster.

Would you like to know more about responsive organizations?
Do you want to learn how you can transform your organization to become (more) responsive? Download our free whitepaper Responsive Organizations here and discover how your organization can become more agile, happier and more successful.

What is a responsive organization?

Responsive organizations are organizations in which change takes place in a natural, organic way. And successfully. Because responsive organizations know how to involve people in their ambitions. They have a strong awareness of the potential for the markets they serve and the economic “ecosystem” of which they are a part.

Why considering your ecosystem matters
All players in an ecosystem need each other to some extent. No company can thrive alone. The position of a company stretches beyond the relationship with its customers. Its position in the entire ecosystem, which includes suppliers, financiers and society, is more relevant to consider. The quality and support of your suppliers, for example, determine the quality and distinctiveness of your products and services. It is relevant that your company engages suppliers with its ambitions. This contributes to innovations and solutions to problems your customers encounter. Another example is the social acceptance for the behavior of your company which is relevant to the reputation of your brand. Your actions, and the motives behind them, will always be discounted by society – and may even be magnified on social media …

Responsive organizations have a strong imagination about their potential. In addition, they are so well connected with their environment (customers, suppliers and the rest of the ecosystem) that they sense very well how they can develop that potential, step by step.

Based on their awareness and imagination, responsive organizations are organized in such a way that development and growth are driven by the employees. Change is inspired, not managed and growth emerges ‘from the inside-out’.  This is caused by a strong connection among the people involved and the outside world, inspired by leadership.

Vision and Mission

Responsive Organizations are able to adapt naturally and effectively to changing market circumstances and unexpected events. Not only that, they also are better able to anticipate market needs and lead the way in the business ecosystem that they are part of. 

Where do you start in developing such a responsive organization? How do you create such energy and engagement among people that they start to move, and contribute, in coherence? 

Responsive Organizations generally have three fundamental characteristics  that provide the energy and direction for their evolution and growth: they have a strong awareness about their place and added value in their market and the ecosystem they are part of. They combine this awareness with strong imagination about the possibilities they have. Because they are very well connected with their customers and other stakeholders in their ecosystem, they have an excellent understanding how they can develop their potential, step by step.

The articulation of such awareness and imagination is most relevant if you want your company to become responsive: this is what attracts the right people to your company and draws customers to the brand of your products and services. So it had better be exciting and inspiring!

The awareness and imagination is where differentiation starts. They can be captured in your company’s ‘Vision and Mission’. Unfortunately, their value is generally underestimated. 

Test it for yourself: visit the websites of five competitors in your market. Read their vision and mission statements. How many of them feel genuine, authentic, strong and compelling? How many can you remember after having read them? Which ones feel like the directors have articulated something they could all agree on – ‘defined by committee’ – and hence have come up with something that does resemble the company, but lacks ‘soul’, let alone has energy? Even worse: the same visions and missions could easily apply to any other company in the same business. How many ‘visions’ and ‘missions’ truly energize and make you relate to the company in question? 

To add to the fun, anonymize these statements and have a little quiz with your colleagues: who can guess correctly which vision and mission belong to which competitor? Chances are nobody gets it 100% right. In other words: most competitors look alike. If that’s the case, price competition will be strong and margins will be low, because it is the only difference the customers could see.

Case in point
One of the best-known examples that hit a huge sweetspot is President Kennedy’s mission to ‘put a man on the moon’ in the nineteensixties. The energy that was fueled by this idea was so strong and compelling that it  unified a nation in ambition, confidence and hope for a better future. The foundation for this mission was of course the United States Space Program. Behind the mission was the vision that the other superpower of that time, the Sovjet Union, had to be defeated – not only in the Cold War did the USA want to express supremacy, but also in other domains, such as the Space Race. This vision of space dominance fueled the direction of the space race, and was made specific in the desire to ‘put a man on the moon’. The direction and energy united the American people and gave rise to the birth and growth of a tremendous industry. 

A similar appeal is made by Elon Musks mission to put people on Mars – the idea is so compelling that investors willingly step in, even though it will take a while before the idea comes true. 

A clear vision demonstrates a strong awareness within a company of its added value and potential in the markets it serves and the ecosystem it is part of. The ecosystem is probably equally important as the customers, because the entire industry’s ecosystem creates the cumulative value in that industry. No supplier can deliver all the technology, creativity and expertise entirely alone. So the stronger your position in your industry’s ecosystem is, the more possibilities you are able to create.

So the vision provides direction for the development of the company. It should be clear, concise and heartfelt. Examples of such visions are: ‘all humans have access to healthy food’, ‘affordable health care is possible for everyone’, ‘muffins can taste much better’. 

Subsequent to the vision, the mission provides the energy that fuels the motion of the company. The mission could also be named the ‘purpose’, the ‘central idea’ or the ‘why’ of the company. When we take the aforementioned visions as example, the accompanying missions could be something like this:

All humans have access to healthy food.Organic food in every supermarket at competitive prices.
Good health care can be accessible for everyone.Online health care insurance, affordable for everyone.
Muffins can taste much better than they do everywhere.Be acknowledged to have the best tasting muffin in the world.
Powerful visions and missions are clear, compelling and easy to remember.

Please note that with these visions and missions there is no misunderstanding about the direction and purpose of these companies. Everybody can remember them and will quickly feel whether they relate to them or not. They also imply what this means for the company’s place and role in its ecosystem. 

Let’s take the example of the muffin baker as an example: if you are that passionate about making the best tasting muffins in the world, at what lengths would you go? How would you engage your employees and lead them? Do you just source the cheapest flour? Or do you engage in discussions with flour producers with regard to their baking quality, the resulting texture? How will you engage them, and other suppliers, on how taste could be improved all of the time? How, then, does the mission reflect in your commercial audience? How do you relate to them, use their feedback, set up user groups? What are the possibilities for apps, big data? What role will you play in the bakery industry at large? What tone will you set? And how do you view your role in society? Could you help people in new ways and thus give something back?

A clear vision and powerful mission open up a whole world of possibilities for your company and they will strengthen its overall position. They get people to move with and for your company and make it more responsive.

Organizing for control or success?

The way many companies shape their marketing strategy still reflects a predictable world with steadily growing markets. Their hierarchies and decision making processes are centralized in a structure of authority and autonomy which decrease as one goes down in the ranks of the organization.

This model no longer works for many companies, since our world has become increasingly more volatile and unpredictable. Executives can no longer assume that, if there is a performance gap, the operation should be changed. As much as the operation, the strategy itself must be under constant scrutiny and adaptation. Marketing Strategy is a continuous process of learning and adapting that involves the whole organization.

Effective marketing calls for rethinking how people in your organization work together, how workflows and teams are created that operate more fluently (across ‘silos’) and can respond more effectively to what happens in the market and economy or society at large. After all, responsiveness is what marketing is all about…

You can read the full article here:

Experience vs Promise

One of the most common misunderstandings in industrial companies and professional service firms is that Marketing is a departmental responsibility. Often, Marketing-Communication is mistakenly identified with Marketing, whereas it actually is a subset of it.

Marketing consists of those activities that conceive, promote, produce and deliver value. There are two parts to marketing. The brand promise is the commercial domain of departments like Marketing-Communication, Market Intelligence, Business Development and Sales. This domain involves those activities that promote and sell the brand and its products or services to the commercial target audience. Increasingly, this is done through digital media. But non-digital media and activities, such as trade shows and (customer) events still play an important role.

Strong brands deliver an excellent brand experience that equals the brand promise. Whether a person’s work is part of the brand promise (business development, sales, marketing communication) or brand experience (such as production, logistics, services, financial control), everybody in an organization contributes something of value. 

The actual brand experience is the most relevant for repeat business and growth. Whereas the brand promise is the result of the commercial operation (business development, sales, marketing-communication), the brand experience is delivered by people involved in production, services, engineering, logistics, finance. 

Case in point
If a Sales manager makes a promise to the customer, the Production department should know about this in order to make the right product. This seems simple enough. However, in many cases it appears difficult for the commercial side and the delivery side of the business to be well aligned all the time. In this case, if Sales and Production are not well-connected, Production now must live up to a promise being made by someone else. That may pose difficulties. It may interfere with other priorities. Or require  adjustments to the assembly line.

What if Production and Sales ‘move as one’ and Sales involves Production in the customer interactions? Not as an exception to particular customer questions, but as an organizational habit. Maybe they come up with even better ideas (two know more than one…). Whatever the promise now is: Sales and Production now own the promise to the customer together. Brand promise and brand experience are coming more in tune with one another.

Now there is a greater likelihood that customer’s expectations will be met or exceeded. And the Production department can absorb customer demands better in its planning process. Both Sales and Production have taken accountability and pride in delivery – their creativity and problem solving capacities have been optimally deployed. Chances are that the brand experience by the customer will be better and the internal way of working has led to both teams being happy with the result and the process that has led to it. 

This example seems simple enough yet such alignment on a structural basis requires the organizational boundaries to disappear. Aligning different departments and their individual priorities and interests behind the customer requirements is key in realizing the brand experience that meets the expectations brought forth by the brand promise. 

Marketing from the inside-out requires the people on both sides of the equation (see figure 1: Brand Experience and Brand Promise) to be well connected across organizational departments, regions and layers. This enables them to better sense signals from the outside and use them more creatively than when market information is limited to just several people and decisions are centralized. Inside-out marketing will be more gratifying for the people involved and, ultimately, delivers a stronger brand.  Rethinking your marketing organization starts at the executive level –  that is where a an integrated approach to marketing can be designed and rolled out. This has a strong impact on the overall organization and will require a deep reconsideration of the way your organization and teams collaborate, how decisions are being made and dilemmas are handled. This is a challenging process, yet one that will bring your organization in more internal harmony and instigate profound transformation. In turn, this will render your company more versatile and resilient. And a place to work that is more engaging for the people involved.

Inside-Out Marketing Podcast

This week Theo Kroese had the pleasure of speaking with Matthew Powell of the marketing research agency B2B International about Marketing from the Inside-Out for their podcast ‘Insights Inside’. 

Our conversation focused around the importance of culture and people in bringing brand experiences that equal the brand promise. We discussed topics like:

  • bringing a brand and customer experience to life through a common goal
  • how B2B businesses can apply it, particularly at the moment whilst working from home
  • how they can overcome pitfalls and challenges
  • what this all means for businesses during times of great uncertainty
  • and how it can help businesses navigate their way out of this crisis

Listen to the full podcast by clicking on the image, or the links to Spotify and Apple Podcast below.

If you have a moment to listen, we’d like to know your feedback and ideas.

Spotify podcast link
Apple podcast link