Most organisations have a natural, in-built bias to maintaining the status quo.
To a large extent this is often because leaders think their previous decisions are still appropriate, or simply, of course, because change itself is often hard. If leaders do make change, often they prefer to make just incremental or small-scale changes that are not too disruptive (or risky) at any one time.
Research shows that over 70% of change initiatives fail!
So, when leaders can’t put off serious change any longer (typically, when they face an unexpected shock or crisis), such change typically comes in a disruptive ‘burst’. This is when words like ‘transformation’ are perhaps banded about. However, the big problem is that research consistently reveals that most change programmes fail (over 70%)! An episodic approach to change simply doesn’t work – which is a major issue, of course, given the scale and frequency of change being seen in almost all markets and sectors nowadays.
What’s needed, rather, is an approach to change that is less about periodic upheavals (exhausting and stressful) or only making incremental (or narrowly-focused) changes (limited impact) and more about adopting an holistic, ongoing approach to change. In particular, it’s about ensuring an organisation and its people have ongoing, inherent flexiblity and adaptability to be able to handle whatever change is needed – easily, fully and rapidly.
There is growing research underlining the link between adaptability and organisational performance.
For example, research a few years ago by KPMG showed that ‘adaptive’ firms grew 3.2 times more than their industries’ average rate of growth. And there was a range of studies quoted in McKinsey’s recent report The State of Organisations 2023: for example, a study at Haas School of Business at the University of California showed a 28 per cent increase in revenue over three years amongst high-tech companies that had adopted an adaptable culture and another study showed that top-performing businesses which had resilient behaviours were 40%+ less likely than lowest-quartile peers to go bankrupt.
Before getting into more about adaptability, though, it’s useful to start with a closer look at transformational change and why it fails so often.
Transformational change and change management
A transformation is a major shift around an organisation’s core ‘strategic fundamentals’ – including all or most or all of the elements of vision, business focus, capabilities, business model, culture and perhaps identity – with the aim being to achieve a ‘step-change’ in levels of performance which the organisation could not deliver previously. True transformations include inspiring people’s hearts, minds and aspirations, boosting their feeling of self-esteem, motivation, and sense of contributing to a wider cause.
A transformation is about achieving a substantial revision of an organisation. This contrasts to ‘change management’ which is best thought of as managing a few specific projects that will deliver some discrete, quite focused, limited and easily definable shifts in how things operate. A transformation is much more wide-ranging, looser, holistic and involving a range of developments which are usually inter-dependent and cross-functional.
Reasons why so many change programmes fail
There are of, course, many change models and guidelines available to leaders for how to achieve successful change initiatives. For example Lewin’s 3-stage model, McKinsey’s 7-S model, Kotter’s 8-step model and Hiatt’s ADKAR framework. However, as said above, the sad fact remains that most change programmes fail. Why is this, then? There are actually many reasons.
Common reasons are typically: leaders don’t have the required combination of mindset, energy and commitment to drive change; leaders fail to excite and motivate people enough by making goals emotionally appealing, aspirational or stretching enough; leaders fail to involve employees early in planning changes; change is based on a weak, incomplete or too rigid strategy; or leaders hold on to conventional views or assumed trade-offs rather than going forward with an open mind.
Other examples of causes of change failure can include: failure to structure and plan the change journey carefully enough or in enough detail up-front; failure to appoint a dedicated change project leader and/or suitably skilled project team; failure to provide the project team with adeqaute resources (e.g. time or access to specialist support staff) or poor use of project management techniques or tools for developing solutions or managing activities; failure to align incentives and rewards well to motivate and encourage people; poor tracking or communication of project progress or ineffectual resolving of problems along the way; and failure by project leaders to keep people’s mindsets focused on overall desired project outcomes, not just on completing individual activities.
The need for in-built, ongoing ‘adaptability’ in organisations
The above issues with change management and transformational change reflect how they are, to a large degree, based around challenges involved in delivering particular and discrete initiatives or projects or trying to treat change as a simple, ‘linear’ process (as suggested by some of those models identified above). Furthermore, these activities typically happen on an ad-hoc, occasional or periodic basis, lasting only a limited amount of time, rather than being part of a permanent, holistic system of change based on strong, rounded capability built into and across an organisation to respond efficiently to change.
I’d like to refer to four key aspects of adaptability: having an adaptive approach to strategy; ensuring an organisation has features and processes that make it highly flexible and adaptable; having leaders who themselves think and manage in an adaptive way; and, finally, ensuring a high, general level of ‘resilience’ amongst everyone who works at an organisation.
As I have often described in my blogging, the traditional, top-down/rigid approach to strategy – leaders once a year (or every few years) trying to forecast ahead and laying down detailed plans for the following few years – no longer works. Today’s world is, of course, too uncertain and change doesn’t just happen conveniently at one time in a year! In real life, leaders make many major decisions across the year in response mostly to ad-hoc opportunities and – equally significant – some issues can be so complex or major that they require several months to work on beyond just the two or three months typically allowed for running an annual planning round.
‘Agile’ strategy is more appropriate – particularly for organisations facing a very fast-moving environment. With this approach, working within a framework of a defined longer-term vision and broad aspirations for the organisation, leaders follow a continuous/rolling process of setting and reviewing activity goals and results in regular, short cycles (typically quarterly). The approach particularly allows for rapid trying out of new ideas and gaining rapid feedback from customers and so allows the organisation to adapt dynamically to changes in its environment.
Not many organisations use the approach yet (beyond larger corporates or in the tech sector), as it demands a very dynamic organisational culture (see next section). Another issue, in my view, is that the fast-paced cycle can risk not giving enough extended time to fully consider more complex or longer-term topics or decisions. However, the approach has lots of potential, especially if organisations try out the process gradually – for example by initially using 6-monthly cycles rather than a quarterly interval.
An alternative approach to agile strategy that can more easily provide for extended time for strategic decision-making is for an organisation to adopt a “dual decison-making system” – consisting of a dedicated structure for strategic-level and major innovation decisions and a second, parallel arrangement focused on (day-to-day) operational decision-making and delivery. It’s an approach advocated by leadership and change writer/guru, John P. Kotter in his book Accelerate (2014).
Whilst managers run the organisation day-to-day around an annually prepared operating plan, there is a parallel process and dedicated meetings looking at a regularly updated agenda of specific ‘strategic’ issues and opportunities, with each issue looked at over a few months (typically involving a task-force, analysis, consultation and extended debate). Once a decision has been reached on an issue, it gets conveyed to operating managers to implement and budgets and operating plans are duly updated. Vitally, of course, operating managers also need to be involved in relevant strategic task-groups – both to capture their insight and ensure their ‘buy-in’.
Other notable arrangements that support or complement an adaptive strategy process include: a matching, shorter cycle to organisational budgeting; strong contingency/resilience planning for different risks/scenarios alongside operational planning; moving from the traditional idea in strategy of seeking a sustainable ‘unique competitive position’ and instead developing a small number (portfolio) of shorter-lasting ‘transient’ advantages; avoiding choices which ‘lock-in’ resources or assets for very long periods; and looking for flexible, low risk collaborations with other organisations.
Adaptive organisations are able to see change coming well-ahead and have qualities and processes that enable them to easily flex and adjust themselves to respond quickly and effectively. What are these qualities? There aren’t actually many established models on this dedicated topic, but it’s worth referring to a few and drawing out the key features they refer to.
One model, based on very extensive research, developed by McKinsey consultants in their book Beyond Performance (2011), introduced the notion of ‘organisational health’ – how well an organisation can achieve a defined vision and – crucially – renew itself in response to fresh opportunities. They proposed nine specific organisational qualities that drive this ability: direction, leadership, culture, accountability, co-ordination, capabilities, motivation, external orientation, and innovation/learning.
Another relevant model, developed by management advisory firm, Deloitte, is called The Adaptable Organisation. It proposes that such an organisation has six key features: it is purpose-driven; it is part of a wider, customer-focused ecosystem; it operates around well-connected, flexible teams; it uses agile ways of working; it emphasizes an individualised approach to developing and engaging talent; and it promotes continuous learning and change.
A third model worth mentioning was developed by consultants at Bain & Co and described in the Harvard Business Review in July 2021. It proposed that nine organisational traits and abilities help organisations excel at change, which can be measured and collectively may be termed as an organisation’s ‘change power’. Those traits are: the organisation has a purpose; direction; taps into informal/social influence of people; organisational capacity; ability to align people (choreography); ability to scale-up/roll-out ideas; learning and development; action orientation; and flexibility.
And a fourth model from yet another consultanccy, KPMG. The key organisational traits they identified for fostering adaptiveness were: being purpose-driven; the ability to continually and quickly identify and seize opportunities; flexible team structures; collaborative networks; distributed decision-making; and having ‘servant’ leadership with an empowered workforce.
These models usefully highlight several, similar qualities. Two particular qualities are worth expanding on: fostering a culture of learning and innovation, and adopting a co-operative and flexible structure.
Examples of some key cultural measures to adopt are: strong intelligence and research systems for external monitoring, particularly customers’ expectations; decision-making processes that are fast and efficient; people are able and motivated to adapt easily to change; strong support to all staff for continual learning and improving their skills; innovation is seen as covering all aspects of an organisation not just customer-facing activities; innovation is treated as an ongoing core activity with a focus on experimentation rather than just analysis; and failures are seen as valuable learning opportunities.
Concerning structure, a key need is that organisations should take deliberate steps to establish strong feelings of connectedess, co-operation, trust and mutual support between all parts of the organisation. Equally, organisations should keep structures and key processes flexible rather than rigid and, rather than pursue cost optimisation in everything, they should put a greater stress on flexibility with some tolerance of some slack resources and adopting a degree of duplicacy and diversity in sourcing policies.
To facilitate an adaptable organisation its leaders – at all levels – need certain key capabilities. In particular, these concern leaders’ cognitive approach and how they manage people in teams.
A vital cognitive skill is adopting a positive, ‘growth’ mindset. This means keeping an outlook on life which is optimistic, confident and ambitious for the future, combined with skill in being tolerant of ambiguity and staying calm in the face of uncertainty or change. And, equally, it means believing a person can learn almost anything new and overcome challenges, rather than regarding one’s abilities as fixed and limited. Such a mindset is vital as a basis for inspiring and motivating others.
A closely related skill is keeping an open, curious and objective outlook on life (what author Julia Galef called a ‘scout mindset’ in her 2021 book for the same title). This includes not just noticing ‘hard’ facts but also ‘soft’, weak signals and more abstract factors (e.g. changed opinions held by people). It also includes being keen to learn continually, hear different viewpoints and readiness to change one’s mind in the light of better information. And it includes being aware of the influence of unconcious biases and seeking to mitigate against them as much as possible.
Another vital cognitive ability for leaders is that of agile thinking (or cognitive flexibility). Research shows that people spend most of their time in a reactive mindset – reacting to challenges, circumstances and other people and (in order to avoid stress or discomfort) relying readily on old habits, existing views or simple solutions. But agile leaders know, in today’s complex world, this approach is inadequate.
Instead, such leaders consciously and purposively allow extra time to create space for (calmly) thinking issues through more roundly and systematically, conferring with others, stimulating more original thinking and reaching clearer judgement. Crucially, agile thinking includes leaders taking heed of their ‘inner’ thoughts and feelings (including intuition, emotions, prior experiences) as well as ‘external’ pointers they perceive (including objective demands of the situation and opinions/advice of other people).
Alongside these personal cognitive skills which help leaders’ own ability to adapt and deal with change, the way they manage other people is important for helping to boost overall adaptability. Most significantly, a leader needs to inspire, empower, and connect people.
Inspiring means motivating and energizing people by articulating a compelling vision, instilling a common sense of purpose and providing a sense of belonging. Empowering involves ceating an open and trusting culture and delegating responsibilty as much as possible to others, whilst also providing encouraging support and coaching. Connecting people means fostering collaboration and greater team-work across an organisation and unlocking potential.
Another vital area of support expected from leaders nowadays, of course, is having appropriate policies and facilities in place to help with the physical and mental health, wider wellbeing and general resilience (see below) of people they manage.
High resilience across the workforce
An adaptable organisation needs all its people – not just its leaders – to be resilient and adaptable.
Resilience is the ability to bounce back from life’s ups and downs, difficulties, or challenges. Resilient individuals know it’s impossible, of course, to erase adversity completely from life, but they have the ability to cope, face change head-on and even gain from a challenging situation. They do this by adopting a range of both mental and behavioural approaches.
Some examples of effective approaches are: trying to think optimistically rather than negatively; staying healthy (particularly exercising often and sleeping well); taking regular (short) breaks during the working-day (ideally outdoors and in the fresh air); learning how to ‘reframe’ situations by replacing or ignoring negative thoughts; spending time with other people who can provide positive support; being ready to seek guidance or help from experts or other people on tasks, if needed; and deliberately taking on new experiences or tasks to boost one’s general confidence.
Leaders of adaptable organisations need to encourage, support and coach such thinking and behaviours amongst all employees.
Continuous adaptability is the way forward ….
The traditional approaches to change – involving either incremental steps or occasional, major disrupton – are no longer adequate to cope with the volatile and uncertain environment most organisations face today. Yes, the project-based methods and tactics involved with them will always have a useful role to play in dealing with change, but really what leaders need is an ongoing, holistic capability of change built into their organisation itself that enables it to respond rapidly and easily to opportunities at anytime, as needed.
Continuous ‘adaptability’ and ‘resilience‘ are the key watchwords for the future, I believe! This article has outlined suitable arrangements concerning four key aspects of this macro-organisational competence – strategy process, organisational functioning, leadership approach and workforce resilience.
Support for your organisation’s approach to change …..
Owen Morris offers tailored workshops for Boards and/or executive teams to review and strengthen their organisation’s approach to change, adaptability and resilience.
If your organisation could use some support with handling change, do give us a call and have a chat with Mike. Ring our office on 01886 881092 or message us via the Contact Us page on this website.