Change Management — an Ambiguity
Change Management is essential to succeed in transformation processes. The second meaning is the art of management, which also needs change. It all starts with inspiring leaders, but will fail fast with inappropriate management techniques.
Change processes fail quite often
Whenever there is a need for essential change in organizations it raises resistance. It’s one thing to design a change but another to realize it. Most of the changes fail because of the human factor and here, Change Management comes into the game. As my appreciated colleague Margit Fischer, our Change Management expert, keeps saying: “Change Management cares about the human side of change”. Change is about people, Companies do not change, but people do.
Stability: where traditional management succeeds
Management is always successful in systems which can be steered and regulated by a “target-actual comparison”. This is a system of first cybernetical order [1] (stability). Most of the change programs follow this pattern. Management or a team designs a change. Then the organization tries to realize the change with appropriate change management methods. If there are stable conditions and fixed targets, like closing sites, reduction of head counts, restructuring departments or changing responsibilities or roles for employees, managing the change is vital. Many good Change Managers did and still do a great job.
Instability: where traditional management fails
But what do we do, if we have unstable conditions and fixed targets are hard or impossible to describe? This indicates a system of the second cybernetical order [1] (instability). By increasing the connectivity and market dynamics in our economy the complexity grows and therefore the demand for continuous adaptiveness of organizations and companies. In such systems self-organization is key to reduce complexity and to cope with it. The problem of self-organization at large-scale is to create an alignment between all parties. Fixed targets are not helpful, often misleading in systems of the second cybernetical order. Here management by “target-actual comparison” will fail. Fine-tuning targets more often or setting stretched targets ease the pain, but will not solve the real problem. In such a system you need to create alignment via purpose (why), common values and principles. Instead of fixed targets a vision gives people orientation to make decisions decentralized into the right direction independently.
From management to leadership
Therefore, management does not just set targets only, they focus on giving reason, explaining the why and involving employees in decision making so that they can co-create the change. This kind of change is not managed from outside and raises another dimension of change management. Here management turns into leadership. It’s more about:
“inspiring change over managing change”
This points out that people do not try to change others but themselves and turns the change perspective from a passive role to an active one.
Nowadays change is becoming the new normal. Our global economy, digitalization driven by new technologies, crises like the corona pandemic or climate change demands us to adapt our behavior more often than ever, especially in business.
Balance the cycle of stability and instability
As mentioned, our economy knows two phases of business. Stability, where you make money, optimize processes and focus on efficiency. Instability, where you lose money by investments for innovations or new services and focus on creativity and learning. In this phase the organization has limited ability to act, the performance will drop. Good leaders achieve a good balance between stability and instability, even in change processes.
Pure top-down approaches fail in complex changes
Many companies are going to start or have already started their digital business- or agile transformation. They try to change their business- and working models and many other related topics to become more adaptive to changing conditions.
Typically, such changes are implemented with a concrete top-down transformation plan, an upfront design and a rollout. Sometimes even without any change management. In the past it worked. But today we recognize in nearly all business areas that changing conditions increase in quantity and quality. As a result, we miss our targets more often. At least efforts and costs for adopting endanger our budgets.
Change on low costs
As mentioned, traditional management approaches fail in complex systems, projects, transformations. Because the complexity we try to solve is so high that a single person (manager) cannot fully understand it or design an appropriate process by themselves. Instead, our organizations need a “collective open process excellence” to deal with complexity successfully. To achieve this we need to establish an empirical process control based on a continuous cycle of inspect and adapt. Therefore, change must be cheap.
Impact on organizational design and management
This has far reaching implications on how we work, organize and manage. Agile working models for large-scale product development focus on cross-functional and self-organizing/self-managing teams. Self-managing? Does that mean we do not need managers anymore? Maybe, in organizations with just one team (7–9 people) only. In large-scale we need an alignment across the teams. Especially if many teams are needed to contribute to creating a customer value. Moving away from a hierarchical, management led organization towards a flat self-managed learning organization is a major and complex change. Therefore, management is in charge to improve the capabilities of the organization by inspiring and to accompany change.
So, how can we inspire such a change if we should not/cannot manage it? In a change process of a large organization managers play a very important role. Real change in organization requires that the change is driven bottom-up and top-down. Bottom-up means that employees are involved in decision making, they co-create the change. This creates ownership and ensures a sustainable improvement process. Top-down is equally important, because management needs to provide the appropriate support and set the overall conditions.
Four leadership skills to succeed
Traditional change management is not enough. We need top-down and bottom-up at the same time where employees and managers co-create the change step by step, based on real feedback. The organization runs an evolutionary process of learning and improving. To achieve this, (change) managers need four leadership skills:
- Reasoning
- Networking
- Coaching
- Organizing
Reasoning: Change is hard. Humans do not like to change, but we change if we understand why there is a need for change and what’s the expected benefit for us. Management must be able to explain that. Leaders can do that.
Networking: To solve complex problems, we need to collaborate and therefore management brings the right people together. We know that self-organized, cross-functional and diverse teams are best in dealing with complexity.
Coaching: Of course, expertise is key. Leaders teach problem solving and act as mentors so that employees learn and grow or become better in what they do. They help them to make their work life more pleasant and succeed in following their career paths.
Organizing: Management can do a lot to initiate different behavior of employees by changing structure. Providing the appropriate environment, facilities, IT equipment and career paths must be organized/managed as well.
It’s a nice wish that every employee will be equally inspired and willing to drive the change by themselves. Even if they would, change is still hard and sometimes employees/teams might lose orientation or they are not aligned anymore. In this case management should be a mirror, help in self-organizing and they might supervise. Supervise in making people solve problems or being aligned but not solving the problem for them. Management needs to deal with resistance. According to John P. Cotter [2], in case of people who are resistant to the change until death, management is in charge to remove these people from the change as an ultima ratio. That’s the ugly but still necessary part of managing a change.
Summary: Drive the Change
If connectivity or dynamics in the market increase (complexity), companies need to increase their inner connectivity and adaptiveness as well. A single human can hardly cope with today’s business complexity. Therefore, collaborating with people with diverse skill sets is the fundament of an overall collective intelligence to find appropriate answers for upcoming challenges. Management is in charge to bring the right people together by changing structure first.
“culture follows structure” -Larman- [3]
Break down silos, not just silo thinking. Meaningful structures enable people to connect with others as easy as possible so they can form networks without further structural change. Self-organizing is key. Aligning dynamic networks is possible by shared, common values and principles. Leaders are needed to enable self-organization with alignment by inspiring people (e.g. for change) and giving reason, by explaining the “Why”. Why is change needed and how can employees personally benefit from the change. Involving employees in decision making will create ownership. When people feel responsible for the success of the change, the change will be sustainable. There is a difference between responsible and accountable! Let’s extend our understanding of change management by inspiring people for change. Turn change from a passive to an active role, be the change.
“Are you driven by change, or are you driving change?”
References
[1] Prof. Dr. Peter Kruse: (2020, 9.Auflage): next practice, Erfolgreiches Management von Instabilität, GABAL Verlag
[2] John P. Kotter (2012): Leading Change, Harvard Business Review Press; 1R Edition
[3] Larman, Craig; Vodde, Bas (2016): Large-Scale Scrum, More with Less, Indiana: RR Donnelley in Crawfordsville.
