Innovative Express

"Improving effectiveness by making the complex simple and making the simple work!"

January 2008

In this issue:

Quick Update: Customer Service
Changing Diapers and Cultures
Personally Speaking...

I hope that you are off to a roaring start in 2008.

If you want to learn how something works, try to change it. Whether it's changing diapers or changing the culture of an organization, there is an art and science to managing change effectively. This month's newsletter takes on the issue of change and how best to manage it.

Inspired to agree, disagree, or otherwise comment? Have an interesting or humorous story to share? I hope that you will let me know your thoughts.

Abhay Padgaonkar
President, Innovative Solutions Consulting, LLC

Quick Update: Customer Service

As an update to last month's newsletter on declining customer service standards, there is still no word from British Air. I believe my complaint has gone into the corporate black hole.

I did hear from someone very high up at a very respectable company. She wrote: "I read with dismay your BA situation. I have to say, I'm not surprised. Many, many people have complained about the deterioration in BA's service. Sad, for such a reputable airline and company. But it comes from the top." She went on to say that if I ever experienced anything of a similar nature in dealing with the company where she is an executive, to please let her know

The fish always stinks from the head downwards.

Changing Diapers and Cultures

If you have ever changed a poopy diaper, you already know that while change is quite necessary, it's not exactly pleasant!

Why then do the presidential candidates keep throwing around the word 'change' as if it were loose change? As you can imagine, this only provides fodder to the cartoonists and late-night talk show hosts. A couple of Pulitzer Prize winning cartoonists among others had a field day with this change agenda. IBD's Michael Ramirez wondered on behalf of the common man "what's in it for me?" Matt Davies, another Pulitzer Prize-winning editorial cartoonist for The Journal News, had a similarly sarcastic view of all the clamor for change.

Michael Ramirez cartoon
Matt Davies cartoon

Taking on the Whole World

If they are not careful, leaders can run into the same skepticism that politicians face when they announce that they will end poverty or eliminate global warming—if only they were elected. Just like people get tired of professional politicking, employees can see the leader of an organization as grandstanding if he or she appears to be not credible.

Clearly a vision to improve the lot of your followers is important, but it's not enough. In his book "Leading Change," James O'Toole says that change leaders have to be simultaneously principled and pragmatic. He says that neither Thomas Jefferson nor Abraham Lincoln wavered in his conviction about the immorality of slavery. Yet as pragmatic politicians they also realized that "they were not authoritarian rulers with the power simply to abolish the evil practice with a wave of the hand." They knew that abolitionists with their do-whatever-it-takes attitude had neither power nor any influence to enact change of such monumental proportion. Similarly, great change leaders learn the art of losing a battle to win the war.

If you have ever tried to make your child eat broccoli, you already know that very few leaders have the power to enforce their will unilaterally on their organization without starting a world war. That's why a combination of principles and pragmatism are essential elements for a change leader.

Avoiding Losses

There is a psychological cost associated with behavior change. One of the most important findings in behavioral research is that losses have a far great impact on people than similarly sized gains—a phenomenon that psychologists Daniel Kahneman and Amos Tversky have called "loss aversion." Any shortcomings of changing the status quo are seen as losses and "losses loom a lot larger than gains." The gains have to outweigh losses by two to four times before people find the new alternative attractive. Giving up what we already have (status quo) seems like too painful a loss.

In his seminal book "Managing at the Speed of Change," Daryl Conner discusses three important implications of the human reaction to change:

Change is considered major when it is perceived to be so by those affected.
Major change is a result of significant disruption in established expectations.
Major change occurs when people believe they have lost control over some important aspect of their lives or environment.

In other words, a change leader faces an uphill task of "selling" his followers on the fact that what he or she is proposing is worth doing despite all the status quo they will have to leave behind.

Power vs. Leverage

Anyone who has been around for a while knows all too well that organization charts don't always describe the real leverage. In his book "Bargaining for Advantage," G. Richard Shell says that "leverage is about situational advantage, not objective power. Parties with very little conventional power can have a lot of leverage under the right circumstances." It is a misconception to think that "position power" and leverage are the same things. He gives the example of how an elderly widow of modest means made Donald Trump's life difficult for more than a decade by not selling a prime property to develop a casino in Atlantic City.

Colin Price writes in his article Business and the art of transformation in The McKinsey Quarterly: "But for all that has been written about change, no one formula can make it successful. The most important factor is often a CEO's ability to create, sustain, and channel the organization's energy. Releasing it requires broad-based action: creating the right architecture for the change program, emphasizing both near-term performance and longer-term health, setting the right aspirations and creating a time line to meet them, embedding change in processes and systems, transforming the behavior of employees, and renewing the senior-management team. This is indeed no small challenge—no other kind of effort requires such strong leadership from the top to make the right impact."

This broad-based action, as opposed to fiat, begins with building a clear and compelling business case for the change. The leader has to be able to paint a compelling vision of the future that inspires and excites the followers. Just painting a pretty picture of Utopia needs to be supplemented with an implementation plan to get there. And last but not least, what actions (and sacrifices) will be necessary from everyone for successful execution.

Psychology of Change Management

And that's why major change initiatives are enormously difficult. That's because they entail changing the mindsets of tens, if not hundreds, of thousands of employees and persuading them to think and act differently.

Explaining new initiatives to workers can help gain their support. The age-old advice of "communicate, communicate, communicate" is just too vague. There is a term in Texas for someone who is full of himself, and loves to hear himself talk. They call it: "Big hat, no cattle." Instead, Phillip Clampitt recommends communicating the following aspects about decisions: how the decision was made, the reasons behind it, what alternatives were rejected, how the decision fits into the organization's mission and vision, what changes it will mean for the company, and how it affects employees.

Emily Lawson and Colin Price lay out four conditions for changing mindsets in their article "The Psychology of Change Management." Being able to see the point of the change and agreeing with it is clearly the first and foremost. "Surrounding structures (reward and recognition systems, for example) must be in tune with the new behavior. Employees must have the skills to do what it requires. Finally, they must see people they respect modeling it actively." So according to them success depends on a purpose to believe in, reinforcement systems, the skills required for change, and consistent role models.

The People Plan

This task of broad-based action to engender change is made even more difficult because an organization needing a major change probably has a demoralized workforce. Such was the situation that Gordon Bethune faced when he took over Continental Airlines—the worst among the nation's 10 biggest airlines in 1994. Continental's employees actually removed Continental insignia from their uniforms walking through airports to avoid having to answer uncomfortable questions. He describes this monumental change effort in a folksy, homespun style in his book "From Worst to First."

One would think that people would simply jump at improving the airline, right? Well, think again. "There were so many people who were so used to working in Continental's dysfunctional environment that they resisted change. Change is difficult, and people undertake it only if they believe they will be rewarded for it." Gordon Bethune and Greg Brenneman hatched a plan called the Go Forward Plan with four parts: a market plan, a financial plan, a product plan, and most important, a people plan.

Bethune describes it as this: "The environment was so bad that regardless of marketing strategies, financial plans, and reliability incentives, there weren't going to be any improvements in Continental's operations until we stopped treating people the way he had been treating them and got them to start working together."

He goes on to say, "So part of our plan—and it was vague at this point, even though over the long term it was by far the most important part of the plan—was to make it a corporate goal to change how people treated each other: to find ways to measure and reward cooperation rather than infighting, to encourage and reward trust and confidence. That was the only real solution to our problem in the long run." He emphasizes that change effort of this magnitude cannot be piecemeal. Because everything is connected to everything else, you have to pay attention to all the important elements.

The point is that oftentimes what is lost in the shuffle are softer, "big picture" aspects of change efforts that are typically associated with the right brain. Why are they important? Because very few transformation projects are purely rational or technical in nature. Virtually every project is "of the people, by the people, for the people." And people happen to have feelings, imaginations, beliefs and a sense of present and future. If you look at change efforts that have failed to meet the expectations, more often than not either ignoring or underestimating this reality was most likely responsible for the undoing of the project. In re-making IBM, Lou Gerstner described "changing the culture—the mindset and instincts of people" as the hardest part.

Doing It Right Or Doing It Over

The higher the risk, the higher the likelihood of overt and covert resistance, low morale, miscommunication, reduced productivity, increased anxiety, general confusion, lack of cooperation, defensiveness, territoriality, and outright hostility. Whether you like it or not, this is the burden you accept when you choose to sponsor, own or manage major change. Still, this level of due diligence is often abandoned because it is perceived as entirely unnecessary or a waste of precious time.

Bottom Line: As legendary basketball coach John Wooden once said, "If you don't have time to do it right, when will you have time to do it over?"

Personally Speaking...

I was alarmed that my children eating very few vegetables. My repertoire when it comes to vegetarian cooking is quite limited. So I was trying to figure out a way to increase their vegetable intake.

I searched the aisles of the traditional and Indian grocery store for ideas and to my surprise discovered several low-fat options such as refried and whole beans of all sorts; various Indian dishes such as spinach, legumes, and garbanzos; roasted potatoes; and—yes, even broccoli with cheese.

Now, they enjoy these as side dishes and even ask for seconds!

Bottom Line: Situational advantage (as a cook) worked far better than position power (as a father).

Disclaimer: "This written advice is absolutely intended to be used, and if used under expert supervision is known to improve organizational and individual effectiveness substantially."