The Most Successful Approaches to Leading Organizational Change – HBR

Posted by timmreardon on 04/20/2023
Posted in: Uncategorized.

April 20, 2023

Summary.   

When tasked with implementing large-scale organizational change, leaders often give too much attention to the what of change — such as a new organization strategy, operating model or acquisition integration — not the how — the particular way they will approach such changes. Such inattention to the how comes with the major risk that old routines will be used to get to new places. Any unquestioned, “default” approach to change may lead to a lot of busy action, but not genuine system transformation. Through their practice and research, the authors have identified the optimal ways to conceive, design, and implement successful organizational change.

Management of long-term, complex, large-scale change has a reputation of not delivering the anticipated benefits. A primary reason for this is that leaders generally fail to consider how to approach change in a way that matches their intent.

Consider Ling Yen*, a client of ours and finance director at an industrial manufacturing company. She sat with her leadership team, aware that the board’s decision to set up a global organization for the company’s specialist functions would not sit well with them. They had been through two global restructures in the last four years — with mixed success. Those changes had required endless governance-reporting back to HQ, as well as tool kits and implementations that change-weary local businesses were finding only partially relevant. Ling Yen decided that she couldn’t ask her people to go through that type of change again. How could she approach this change in a way that was different, sustainable, and less effortful?

When we ask leaders what they think about when deciding how to go about any major organizational change, they often struggle to answer. Too often, their attention is focused on the what of change — such as a new organization strategy, operating model or acquisition integration — not the how — the particular way they will approach such changes. Such inattention to the how comes with the major risk that old routines will be used to get to new places.

Any unquestioned, “default” approach to change may lead to a lot of busy action, but not genuine system transformation. Through our practice and research, we’ve identified the optimal ways to conceive, design, and implement successful organizational change.

Four change approaches

Our change-approaches framework, comprised of four distinct approaches to change, steers leaders through their choices, helping them assess what model they currently use and make decisions about the optimal approach to take. This often requires a shift in leadership attitude and skill.

  • Directive change: A tightly controlled series of steps and recipes are prescribed by top management, who alone decide on the direction of the change (the what) and the way to get there (the how). There is close control over what needs to be done, change is led through marshaled programs, and buy-in is demanded. There is minimal capability building, and communications are in one-way “transmit” mode. The predominant leader mindset is “I can manage change.” To Ling Yen, this sounded familiar.
  • Self-assembly change: While top management has a clear definition of the change direction, implementation (including adaptation) is largely delegated to local management. In this approach, you see a proliferation of tools, templates, and workshops to launch change, and while these activities are closely tracked, their impact is overlooked. There might be some minimal capability building led by the tool/initiative providers (e.g., a central program management office). The predominant leader mindset is “launch enough and something will stick.” Ling Yen really felt her anxiety rising when she read this.
  • Masterful change: Change direction is led through top management and held in a consistent manner across the organization, and leaders spend extensive time and energy on high-quality engagement and dialogue with multiple stakeholders to refine it. Within this clearly defined frame, top management gives people freedom to implement as they see fit and supports them with significant change-capability building. Formal and coordinated networks are set up to spread learning. The predominant leader mindset is “I trust my people to solve things with me.” Ling Yen felt relief when considering this option (“If only!” she said).
  • Emergent change: Leaders have a guiding intention and a loose direction, but within this expansive frame, only a few “hard rules” govern the actions of those involved in the change. Rather than having a fixed, grand plan, leaders focus their action on a few hot spots and leave room for experimentation and learning from rapid feedback loops. Change moves in a step-by-step fashion, and leaders stay alert and responsive to dynamic changes in the environment. The predominant leader mindset is “I can only create the conditions for change.” Ling Yen felt that the technical complexity of her tax function could be compromised if this approach were followed, at least for now.

See more HBR charts in Data & Visuals 

In four rounds of research across two decades, we’ve found that the two change approaches most present in successful, high-magnitude change are masterful and emergent. Masterful was particularly present in successful long-term change, emergent in change at pace. Conversely, directive and self-assembly change are most present in stories of low success in complex change, with self-assembly being negatively related to change outcomes in all circumstances. Such simplistic approaches, while the most dominant across our research, won’t cut it in today’s dynamic, interconnected world.

Insight Center Collection Managing ChangeStrategies for transformation at midsize companies and beyond. 

Here’s how business leaders can use the change-approaches framework to move toward the two modes of implementation most correlated with success.

Masterful change in action

After learning about the four change approaches, Ling Yen was considering trying out masterful change and worked on getting support from the board:

Due to my own exhaustion, I was finding it hard to create the space to think differently. I also felt a personal responsibility to lead my people closely to contain their anxiety to ensure we could get better at change. I voiced my concerns to my board members and agreed that so long as the broad organizational principles and benefits in the business case were met, they would support a different approach to change.

Here’s how Ling Yen put the masterful change approach into action:

  1. Naming what had been difficultabout previous large-scale changes and consciously agreeing on what to do differently with her team. Ling Yen’s speaking about her own doubt led her team to be open about theirs. That candor helped them start to form a strategy: “We noted that in the previous single-minded focus on delivery and doing what the global project management office told us, we had stopped talking to the people most affected. That had to change,” Ling Yen told us.
  2. Her team then put significant resources into discovering and understanding their stakeholders and networks,using design thinking. What did the stakeholders want and how would they like to work? How could they share the load of this complex project? “Just as the board was trusting me with a new approach, we were also trusting others. This was a revelation, and it enabled us to decide where to put our effort and where not to.” Deeper understanding led her team to take further new action.
  3. They then put significant investment into dedicated change skill-building initiatives, including having conversations that got beneath the surface to detect and work with systemic issues as they arose rather than after the event. They also looked at the underlying forcesthat would support or hinder change — for example, the company’s tax function might now have to pay a price for the change.
  4. They relaxed control and created a place for learning. Previously in directive change, they had been spending inordinate time just monitoring and managing the program and not hearing about the learning that was occurring. The feedback from this approach was that “no-one listens to us” and “the left hand doesn’t know what the right hand is doing” — in other words, people felt ignored. Now by including stakeholders, they created formal learning networks that regularly fed back what needed to be adjusted to make the mandated change to their function effective.

These basic changes made a large difference. While the change solution — the restructure — was set from the top, people felt more engaged and had ownership of the change. Creative ideas about how to make the model work flowed in from local geographies. The project was delivered because leaders trusted their people to solve things with them.

Emergent change in action

Another client of ours, a charity, saw its primary source of revenue drop by 47% due to the closure of its physical retail shops during the Covid pandemic. Pre-pandemic, the shops had been managed regionally with a standard set of operational principles. All of this was about to change. At a critical meeting of the board of trustees, they agreed to use their volunteers as a resource. Here’s how Julian, the charity head, adopted an emergent change approach:

  1. Julian set a loose intention that united the whole system — in this case, halting revenue decline had become the number-one priority. Emergence requires an aligning “ripe issue,” yet the solution is not pre-determined (as it was in Ling Yen’s case).
  2. It was time to experiment and use the passion and energy of the thousands of volunteers who worked with the organization. Julian’s board of trustees specifically agreed that they had to create an environment of high trust and rely on the volunteers’ experience of running retail and hear their ideas.
  3. Emergent change is not a free for all, so they agreed that there should be a minimal set of principles (i.e., “hard rules”) within which the physical retail offering could be adjusted: a) No new financial or contractual obligations. b) Retail space can be used for anything that contributes to the generation of revenue. c) Project teams post their learning on the nationwide knowledge-sharing platform
  4. Julian fostered conditions of connectivity and rapid feedback loops. Previously organized in regional pockets, technology enabled the volunteer network to collaborate at a national level. This network provided valuable insights into how retail worked as a whole. After an initial idea-generation forum, smaller networks began to form around ideas about what might halt the decline of revenue. “It was amazing,” Julian said. “It felt as if we had unlocked and released a huge wave of energy that was up for anything.”
  5. Julian engaged the periphery and allowed differentiation. Without formal managed control but following the “hard rules,” shops were now being tried and tested based on their ideas for what would work in their specific area. Differentiating ideas for urban versus rural contexts arose and proved impactful. The volunteers had also created safe spaces for people to come and meet and learn about the charity, leading to longer-term donor relationships.

Julian perfectly summed up this approach to change: “We can only create the space and permission for change to happen — the rest is up to the others.”

How to approach change

Here’s how leaders can implement the change-approaches framework at their organizations:

  • Start by determining your change intention. Broadly, what will the change generate? How complex will this change be? Consider its scale, time horizon, and impact on different stakeholders and areas of the organization, as well as how many variables will require change.
  • Use the change-approaches framework to diagnose the current and past approaches and what might be needed now. We’ve found masterful change to be most related to success in long-term change, and emergent change to be well-suited for when you need change to happen quickly.
  • Revert to your intention. If your change requires a deep transformation in underlying beliefs and new ways of working in complex contexts, it’s more than likely that a combination of masterful and emergent change approaches will be the most successful.
  • If there is a gap between how you currently approach change and the approaches you most need now, investigate the underlying leadership mindsets that might need adjusting.
  • Communicate your conscious decision about the change approach clearly and consistently to your organization. How you plan to go about the change is of equal importance to what the change is going to be about. Get feedback from your organization as you implement change to keep you and your team honest. Ask, “Does the way in which we go about change now feel genuinely different?” Maintain a curious approach.
  • Build change literacy and capability broadly within your organization — it’s not just you who needs to know about these change approaches.

The first step to being a successful change leader is to be aware of the change-implementation choices available to you. Then, make a thoughtful, intentional choice about which approach to take, and consistently hold to that choice throughout the implementation.

* Names have been changed throughout.

  • Deborah Rowland is the co-author of Sustaining Change: Leadership That Works, Still Moving: How to Lead Mindful Change, and the Still Moving Field Guide: Change Vitality at Your Fingertips. She has personally led change at Shell, Gucci Group, BBC Worldwide, and PepsiCo and pioneered original research in the field, accepted as a paper at the 2016 Academy of Management and the 2019 European Academy of Management. Thinkers50 Radar named as one of the generation of management thinkers changing the world of business in 2017, and she’s on the 2021 HR Most Influential Thinker list. She is Cambridge University 1st Class Archaeology & Anthropology Graduate.
  • Michael Thorley is a qualified accountant, psychotherapist, executive psychological coach, and coach supervisor integrating all modalities to create a unique approach. Combining his extensive experience of running P&L accounts and developing approaches that combine “hard”-edged and “softer”-edged management approaches, he works as a non-executive director and advisor to many different organizations across the world that wish to generate a new perspective on change.
  • Nicole Brauckmann focuses on helping organizations and individuals create the conditions for successful emergent change to unfold. As an executive and consultant, she has worked to deliver large-scale complex change across different industries, including energy, engineering, financial services, media, and not-for profit. She holds a PhD at Faculty of Philosophy, Westfaelische Wilhelms University Muenster and spent several years on academic research and teaching at University of San Diego Business School.

Article link: https://hbr.org/2023/04/the-most-successful-approaches-to-leading-organizational-change?