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Accelerating
Innovation: The Human Element in Managing Change
by
Kenneth W. Christian, Ph.D.
Businesses must adapt in order to survive. It is a law. Businesses,
however, still too often invest resources in technology, systems and
hardware related to change efforts, without investing similarly in
managing the associated human factors.
This
is always a mistake and can be quite costly. It is the personnel—the
humans—with their feelings, habits, and existing beliefs, that
ultimately make or break the success of any change initiative
regardless of its seeming importance or the abstract elegance of its
design or conception.
The
idiosyncratic biases, impressions and vested interests of those who
must implement change can neither be simply ignored nor managed by
improvisation. When businesses recognize they must change but do
not properly account for the human factors associated with the change,
they slow down the process of change and reduce the adaptability of
their organization by the very act of introducing what they intend as
innovation or improvement.
They
also frequently increase the expense. All change, whether initially
perceived as positive or negative, necessary or unnecessary, produces
resistance. People would rather remain consistent than change, even if
they perceive a proposed change as beneficial.
Change
is messy, disruptive, makes us think, and pulls us out of the
comfortable groove of well-worn habits. Basically people don’t
like that but more than that they resist it.
They
resist it all the more if they have been through it before and seen
changes fail to actually be implemented or simply come and then go with
no result other than inconvenience. Why, they quite reasonably ask,
should they be hassled by another change for change’s sake?
For a change initiative to be successful, careful consideration,
long-range planning, which includes an informed selection of tactics,
is necessary in advance of any change initiative to effectively manage
this inevitable resistance.
Decisions
as to how to champion, sponsor, introduce, support, and reinforce
change must be laid out well before the fact. Further, the change
process must be consistently monitored and modified as necessary
throughout the entire period of transition in order to implement the
change on time, and at, or under, budget.
If
unmanaged, resistance will delay or completely sabotage implementation,
and as a result not only create confusion and waste resources, but also
add a negative chapter to the company’s change history.
This,
in turn, will imperil future change initiatives, and simultaneously
reduce morale and undermine effective leadership. In an era when
organizations must be more adaptable than ever, these are unnecessary,
self-defeating outcomes.
What
to do? Since in addition to producing resistance change also raises the
twin questions “What’s in it for me?,” and “How is this going to affect
me?,” these questions must be anticipated and managed in advance. That
is, they must be accounted for, and answered before the fact.
Here
are three major common changes common to contemporary business along
with the responses they typically generate.
Acquisitions and Mergers
In
acquisitions and mergers, employees of both companies are extremely
suspicious of the implications of impending changes. In acquisitions
the employees of the company being acquired are concerned about whether
they will retain a position at all, and whether they will like what
their job becomes after the acquisition is complete.
Other questions concern how they will be evaluated, what will be
expected of them, whether they can meet these challenges, and whom will
they have to work for and adapt to.
Emotionally
they may feel orphaned by their existing company, suspicious of being
the stepchildren of the new organization, or in hostile takeovers they
may feel like prisoners of war. In any circumstance they may fear
relocation, and the effect that change will have on their personal life
and family and “quality of life” considerations.
In mergers, such as Chrysler/Daimler-Benz, employees wonder if the
merger is merely window dressing for an acquisition or takeover; this
creates another level of intrigue and paranoia. In mergers, even years
later their has been no true merging and the business equivalent of a
stepfamily exists with pockets of ongoing loyalty to the old ways on
each side.
Doubts and uncertainties of this type gravely affect employee
performance during the transition. They may reach crisis proportions.
If not managed appropriately, the uncertainty produced causes enormous
disruption and often as much as 25% of the workforce who are involved
in this kind of change leave.
In those who remain, feelings may go unresolved, and even years after
the transition, performance may not have reached its former level.
Downsizing
Downsizing
is a strategic business change that can have immediate positive effect
on the bottom line but produce damage in the organization. It must be
managed extremely well.
Though
the story now seems almost quaintly from a bygone era, especially in
comparison to the shifts that have rocked business since, IBM was
wrenched by its original downsizing efforts because the culture of Big
Blue had promised lifelong employment in exchange for loyalty to the
organization. IBM had always been a winner and seemed exempt from
forces in play in other organizations.
Executives who spent a career with IBM suddenly faced the dubious
opportunity of an unplanned career shift. Many who remained experienced
a kind of survivor’s guilt, and no one could ever feel the same about
Big Blue even after the correctness of the downsizing later became
manifestly evident.
Downsizing creates enormous mistrust, generates fear, reduces risk-
taking and creativity, and badly damages employee loyalty and morale.
After downsizing many more people leave, others begin operating
protectively and defensively and/or shopping their resumes. Some
studies have demonstrated that downsizing often fails to bring about
expected savings.
The rollout of New Office
Technology or Systems
Adopting new ways, new equipment, and new systems usually meets with
resistance. “If it ain’t broke, don’t fix it,” sentiments arise
reflexively and employees resist both overtly and covertly.
Overtly, they give logical-sounding “reasons” the change will not work
or cannot be implemented. Covertly, they drag their feet on the
implementation in a variety of ways, finding fault with the new and
continuing to adhere to the old, seemingly hoping the change will go
away or that their resistance will eventually break the resolve of the
change agents and that the initiative will be dropped.
Others, convinced that change is necessary overall, will beg that they
personally or their particular department be exempt from implementing
the change. Others still, willing to change at some point, create a
delay or ask for a delay citing that a different time, much later,
would be much better for implementing the change.
It is typically the case that the touted benefits of new software
installations are never embraced or utilized despite expensive training
programs because employee resistance is often not addressed and
managed. Anecdotal accounts suggest that many of the features of
expensive software installations such as SAP go unused.
For all three types of strategic business changes mentioned above,
implementation management is crucial to the successful completion of
the change initiative and to the ongoing health of the organization.
• A case in point: In April of 1998, the privately held auctioneers and
appraisers, Butterfield & Butterfield, acquired Dunning’s, the
preeminent local auction house in Chicago and a family-run business.
For Butterfield & Butterfield, then the third-largest auction house
in the U.S. behind Sotheby’s and Christie’s, this acquisition fit with
their overall plan of expansion and eventual desire to go public. It
was for them, however, a new and unusual move.
Their
operations began and were still headquartered in San Francisco.
Expansions into Los Angeles, Seattle, and Portland markets were all
begun from scratch as satellite operations. The change was viewed as
positive, but a major shift in direction.
Their initial feelings about the acquisition fit a classical pattern
for positive changes, i.e., uninformed confidence. Their planning was
simple, minimal, and overly optimistic.
They
were undoubtedly right in their appraisal of this acquisition as a
business opportunity. They were undoubtedly wrong in their assessment
of the ease with which they could transform this closely-held, 50
employee business, into a Butterfield’s.
I
talked with John Gallo, the president of Butterfield’s after he
returned from his first visit after the acquisition to the former
Dunning’s. He had gone to address the staff and reassure them of their
continued employment and his organization’s good intentions.
He marveled that despite his speech, everyone he met with privately
wanted to know if they would continue to have a job and if so, whether
they would receive an increase in pay. He also began to see the first
signs of resistance to Butterfield’s computerized system of tracking
auction items and to the introduction of the first system of
computerized financial records, including monthly balance sheets.
Mr. Gallo’s frustration and amazement suggested he was beginning to
move from uninformed confidence to informed doubt about the ease of
making this acquisition work.
At Dunning’s, on the other hand, a change had been coming for some
time, and it was considered threatening and negative. Resistance was
complex and involved two types of employees with three very different
frames of reference—that of the seven family members who felt cut
adrift by the sale, that of the owner who had sold the business, and
that of the employees.
All were perplexed and alarmed by what they feared would be a loss of
their culture—the way of doing things that they had grown accustomed
to. Many felt that though they had previously been underpaid, at least
they knew what was expected of them.
All had in their own ways passed through classic stages of loss
including immobilization, denial, anger and bargaining, and still had
considerable apprehension. Their culture had been rocked, and all
employees, including the relatives, had no special guarantees of
continued employment. At that moment no one had yet quit but all were
considering their options and performance had become erratic.
Fundamental Issue
Businesses must adapt in order to survive. That is a certainty. But in
the largest picture, businesses must adapt the way they manage
transitions if they are to be nimble in a business climate where
reasoned change is imperative.
Only
by taking the inevitable resistance to change into account, planning
for it, and managing it from the inception of the change initiative
will businesses be able to thrive or even survive in this new
millennium.
In those cases where the cost of change is factored in and directly
planned for and managed, the pace of innovation within the organization
is not only accelerated in terms of that particular change but the
effects permeate the organization in general, producing an organization
with a history and consequently a culture of accelerating innovation.
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Kenneth
W. Christian, Ph. D., is a licensed psychologist with more than a
quarter century of experience helping individuals, and organizations
and their leaders maximize potential in order to maximize gains in
productivity and innovation.
His
work led him to found the Maximum Potential Project and to
write Your
Own Worst Enemy: Breaking the Habit of Adult Underachievement.
Also see interview with him: Striving for achievement
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