In 1996, John Kotter published Leading Change. Considered by many to be the seminal work in the field of change management, Kotter’s research revealed that only 30 percent of change programs succeed. Since the book’s release, literally thousands of books and journal articles have been published on the topic, and courses dedicated to managing change are now part of many major MBA programs. Yet in 2008, a McKinsey survey of 3,199 executives around the world found, as Kotter did, that only one transformation in three succeeds. Other studies over the past ten years reveal remarkably similar results. It seems that, despite prolific output, the field of change management hasn’t led to more successful change programs.
It also hasn’t helped that most academics and practitioners now agree on the building blocks for influencing employee attitudes and management behavior. McKinsey’s Emily Lawson and Colin Price provided a holistic perspective in “The psychology of change management,” which suggests that four basic conditions are necessary before employees will change their behavior: a) a compelling story, because employees must see the point of the change and agree with it; b) role modeling, because they must also see the CEO and colleagues they admire behaving in the new way; c) reinforcing mechanisms, because systems, processes, and incentives must be in line with the new behavior; and d) capability building, because employees must have the skills required to make the desired changes.
This prescription is well grounded in the field of psychology and is entirely rational. One of its merits is its intuitive appeal: many managers feel that, once revealed, it is simply good common sense. And this, we believe, is precisely where things go wrong. The prescription is right, but rational managers who attempt to put the four conditions in place by applying “common sense” typically misdirect time and energy, create messages that miss the mark, and experience frustrating unintended consequences from their efforts to influence change. Why? Because when they implement the prescription, they disregard certain, sometimes irrational—but predictable—elements of human nature.
In our research and by working with companies attempting change, we have identified nine insights into how human nature gets in the way of successfully applying the four conditions required for behavioral change. As we describe these insights, we’ll show how various companies have, either by conscious awareness or simple luck, overcome or leveraged counterintuitive sides of human behavior in making change happen.
Creating a Compelling Story
Change-management thinking extols the virtues of creating a compelling change story, communicating it to employees, and following it up with ongoing communications and involvement. This is good advice, but in practice there are three pitfalls to achieving the desired impact.
1. What motivates you doesn’t motivate most of your employees. We see two types of change stories consistently told in organizations. The first is the “good to great” story: something along the lines of, “Our historical advantage has been eroded by intense competition and changing customer needs; if we change, we can regain our leadership position.” The second is the turnaround story: “We’re performing below industry standard and must change dramatically to survive. We can become a top-quartile performer in our industry by exploiting our current assets and earning the right to grow.”
These stories both seem intuitively rational, yet they too often fail to have the impact that change leaders desire. Research by a number of leading thinkers in the social sciences, such as Danah Zohar, has shown that when managers and employees are asked what motivates them the most in their work they are equally split among five forms of impact—impact on society (for instance, building the community and stewarding resources), impact on the customer (for example, providing superior service), impact on the company and its shareholders, impact on the working team (for example, creating a caring environment), and impact on “me” personally (my development, paycheck, and bonus).
This finding has profound implications for leaders. What the leader cares about (and typically bases at least 80 percent of his or her message to others on) does not tap into roughly 80 percent of the workforce’s primary motivators for putting extra energy into the change program. Change leaders need to be able to tell a change story that covers all five things that motivate employees. In doing so, they can unleash tremendous amounts of energy that would otherwise remain latent in the organization.
Consider a cost reduction program at a large US financial-services company. The program started with a change story that ticked the conventional boxes related to the company’s competitive position and future. Three months into the program, management was frustrated with employee resistance. The change team worked together to recast the story to include an element related to society (to deliver affordable housing, for example), customers (fewer errors, more competitive prices), the company (expenses are growing faster than revenues, which is not sustainable), working teams (less duplication, more delegation), and individuals (more attractive jobs).
This relatively simple shift in approach lifted employee motivation measures from 35.4 percent to 57.1 percent in a month, and the program went on to achieve 10 percent efficiency improvements in the first year—a run rate far above initial expectations.
2. You’re better off letting them write their own story. Well-intentioned leaders invest significant time in communicating their change story. Road shows, town halls, and Web sites are but a few of the many approaches typically used. Certainly the story (told in five ways) needs to get out there, but the insight we are offering is that much of the energy invested in communicating it would be better spent listening, not telling.
In a famous behavioral experiment, half the participants are randomly assigned a lottery ticket number while the others are asked to write down any number they would like on a blank ticket. Just before drawing the winning number, the researchers offer to buy back the tickets from their holders. The result: no matter what geography or demographic environment the experiment has taken place in, researchers have always found that they have to pay at least five times more to those who came up with their own number.
This reveals something about human nature: when we choose for ourselves, we are far more committed to the outcome (almost by a factor of five to one). Conventional approaches to change management underestimate this impact. The rational thinker sees it as a waste of time to let others discover for themselves what he or she already knows—why not just tell them and be done with it? Unfortunately this approach steals from others the energy needed to drive change that comes through a sense of ownership of the answer.
At BP, to develop a comprehensive training program for frontline leaders, a decision was made to involve every key constituency in the design of the program, giving them a sense of “writing their own lottery ticket.” It took a year and a half to complete the design using this model but was well worth it: now in implementation, the program is the highest rated of its kind at BP. More than 250 active senior managers from across the business willingly teach the course, and, most important, managers who have been through the training program are consistently ranked higher in perfor-mance than those who haven’t, both by their bosses and by the employees who report to them.
3. It takes a story with both + and – to create real energy. The “deficit based” approach—which identifies the problem, analyzes what’s wrong and how to fix it, plans, and then takes action—has become the model predominantly taught in business schools and is presumably the default change model in most organizations. Research has shown, however, that a story focused on what’s wrong invokes blame and creates fatigue and resistance, doing little to engage people’s passion and experience.
This has led to the rise of the “constructionist based” approach to change, where the change process is based on discovery (discovering the best of what is), dreaming (imagining what might be), designing (talking about what should be), and destiny (creating what will be). The problem with this approach is that an overemphasis on the positive can lead to watered-down aspirations and impact. The reason is that, as humans, we are more willing to take risks to avoid losing what we’ve got than we are to gain something more. Some anxiety is useful when it comes to spurring behavioral change.
We believe the field of change management has drawn an artificial divide between deficit-based and constructionist-based approaches and stories. While it is impossible to prescribe generally how the divide should be split between positive and negative messages (as it will be specific to the context of any given change program), we strongly advise managers not to swing the pendulum too far in one direction or another. Consider Jack Welch, former CEO at GE, who took questions of “what’s wrong here?” (poorly performing businesses, silo-driven behavior, and so forth) head-on, as well as “imagining what might be” (number one or two in every business, openness, and accountability).
- To read the full article on The McKinsey Quarterly, click here »
