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The Inconvenient Truth About Change Management

The Inconvenient Truth About Change Management

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Published by William Zeng
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Categories:Types, Business/Law
Published by: William Zeng on Oct 12, 2012
Copyright:Attribution Non-commercial


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The Inconvenient TruthAbout Change Management
Why it isn’t working and what to do about it 
by Scott Keller and Carolyn Aiken
Conventional changemanagement approacheshave done little to changethe fact that most change programs fail. Te odds canbe greatly improved by anumber of counterintuitiveinsights that take intoaccount the irrational but  predictable nature of howemployees interpret their environment and chooseto act.
In 1995, John Kotter published research thatrevealed only 30 percent of change programs aresuccessful. Fast forward to 2008. A recent McKinsey& Company survey of business executives indicatesthat the percent of change programs that are asuccess today is… still 30%. The field of ‘changemanagement’, it would seem, hasn’t changed athing.Digging deeper into why change programs failreveals that the vast majority stumble on preciselythe thing they are trying to transform: employeeattitudes and management behavior. Conventionalchange management prescribes addressing thesebehavioral and attitudinal changes by putting inplace four basic conditions: a) a compelling story,b) role modeling, c) reinforcement systems, and d)the skills required for change. These prescriptions are well grounded inpsychological research and make good commonsense – which, we believe, is precisely wherethings fall apart. The inconvenient truth of humannature is that people are irrational in a numberof predictable ways. The prescription is right, butrational managers who attempt to put the fourconditions in place by applying their “commonsense” intuition typically misdirect time andenergy, create messages that miss the mark, andexperience frustrating unintended consequences.In the same way that the field of economicshas been transformed by an understanding of uniquely human social, cognitive and emotionalbiases, so too the practice of change managementis in need of a transformation through an improvedunderstanding of the irrational (and oftenunconscious) nature of how humans interprettheir environment and choose to ac
a) Creating a Compelling story
#1: W v  ’ v(   .
Research confirmsthat there are at least five sources of meaning forhumans at work: impact on society, the customer,the company/shareholder, the working team, and“me” personally. What’s more, workforces are evenlysplit as to which of these is a primary motivator.“Telling five stories at once” is the key to unleashingmaximum energy for change.
#2: y’     w w .
Research indicates that whenemployees choose for themselves (versus “beingtold”), they are more committed to the outcome bya factor of almost five to one. Time communicatingthe message should be dramatically rebalancedtowards listening versus telling.
#3: i k  “+”  “–”  c .
Deficit-based approaches (“solve theproblem”) to change can create unproductivefatigue and resistance. Constructionist-basedapproaches (“capture the opportunity”) generatemore excitement and enthusiasm, but lead to risk-averse solutions. By moving beyond this dichotomyand pursuing both approaches simultaneously,managers can neutralize these downsides andmaximize impact in mobilizing the organization.
b) role modeling
#4: y  v   “ c.”
Most executives have the will andskill to role model, but don’t actually know “what”they should change due to their self-servingbiases (if they didn’t think what they were doingwas right, they wouldn’t be doing it). Smart useof concrete 360-degree behavioral feedback canbreak through this barrier.
#5: ic  ’
It is not enough to invest in a few rather than inmany as a way of catalyzing desired changes, nomatter how appealing the idea is. New researchshows social “contagions” depend less on thepersuasiveness of “early adopters” and more onhow receptive the “society” is to the idea. Whileinfluence leaders are important, we warn againstoverinvesting in them – your effort is better spentelsewhere.
C) reinforCing meChanisms
#6: m    xv w v .
A change program’s objectivesshould be linked to employee compensation toavoid sending mixed messages. Little upside isgained, however, due to a number of practicalconsiderations. There is a better, and less costly, way.Small, unexpected rewards have disproportionateeffects on employees’ motivation during changeprograms.
#7: a  c      c.
Employees will go against their ownself-interest if the situation violates other notionsthey have about fairness and justice. Carefulattention should be paid to achieve a fair processand fair outcomes in making changes to companystructures, processes, systems and incentives.
d) Capability building
#8: e  w  k.
Behaviorsdrive performance. Mindsets (the thoughts, feelingsand beliefs held by employees) drive behaviors.Capability building should focus on technical skillsas well as shifting underlying mindsets that enablethe technical skills to be used to their fullest.
#9: g  ’ .
Even withgood intentions, it is unlikely employees will applynew skills and mindsets unless the barriers topractice are lowered. The odds can be improvedby using “field and forum” approaches linked totrainees’ day-to-day accountabilities reinforced byquantifiable, outcome-based hurdles along theway.
sw   !
Where we have tested these inconvenient truthsin practice versus more rational, conventionalapproaches to influencing behavior we havefound they achieve significant positive results. Forexample, in 18-month longitudinal studies usingcontrol and experimental group methodologieswe achieved a 19 percent lift in profit per bankerversus 8 percent and a 65 percent reduction incall center customer churn versus 35 percent withconventional approaches alone.
The Inconvenient TruthAbout Change Management
Why it isn’t working and what to do about it 
Page 1The Inconvenient Truth About Change Management 
The Inconvenient TruthAbout Change Management
Why it isn’t working and what to do about it 
Conventional change management approaches have done little to change the fact that most change programs fail. Te odds can be greatly improved by a number of counterintuitiveinsights that take into account the irrational but predictable nature of how employeesinterpret their environment and choose to act.
In 1995, John Kotter published what many consider to be the seminal work in the field of change management,
Leading Change: Why ransformation Efforts Fail.
Kotter’s “call to action”cited research that suggested only 30 percent of change programs are successful.
His work thengoes on to answer the question posed in its titleand to prescribe what it takes to improve thissuccess rate.Kotter is perhaps the most famous purveyorof change management wisdom, but in facthe is one of many who have a point of view regarding how managers and companies can bestmanage change. In the last two decades, literally thousands of books and journal articles havebeen published on the topic. oday, there aremore than 1,800 books available on Amazon.comunder the category of “Organizational Change.”
 he field has developed to the extent that coursesdedicated specifically to managing change arenow part of the curriculum in many major MBAprograms.
With so much research done and informationavailable on managing change, it stands to reasonthat change programs today should be moresuccessful than those of more than a decade ago,right?he facts suggest otherwise. McKinsey & Company recently surveyed 1,546 businessexecutives from around the world, asking them if they consider their change programs “completely/mostly” successful: only 30 percent agreed.
 Further investigation into a number of similarstudies over the last 10 years reveals remarkably similar results.
he field of change management,it would seem, hasn’t really changed a thing.his failure to live up to its promise is why many senior executives today recoil at the meremention of the words ‘change management’.Memories come flooding back of significant timeand effort invested in “the soft stuff” that, in theend, yielded little tangible value.he focus of McKinsey’s applied research overthe last four years has been to understand why change management efforts consistently fail tohave the desired impact and, most importantly,what to do about it. At this point in ourresearch we don’t claim to have all the answers.We have, however, developed and tested a set of perspectives in real-life application that seniormanagers have found genuinely insightful andthat have consistently delivered business resultsfar beyond expectations.
sc K
 (scott_keller@mckinsey.com)is a Partner inMcKinsey & Company’sChicago Oce. Heleads McKinsey’sOrganizationalBehavior Practice inthe Americas andhas deep experiencein counsellingsenior executiveson organizationperormance andchange eectiveness.Also rom McKinsey &Company is
 (carolyn_aiken@mckinsey.com), is
Associate Principalin McKinsey’sOrganization Practicebased in the TorontoOce who haspioneered innovativeapproaches to CEO,top-team andorganization-widechange eectiveness.

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