Author Archives: Greg Satell

About Greg Satell

Greg Satell is a popular speaker and consultant. His latest book, Cascades: How to Create a Movement That Drives Transformational Change, is available now. Follow his blog at Digital Tonto or on Twitter @Digital Tonto.

True Transformation Goes Across Not Top-Down Or Bottom-Up

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True Transformation Goes Across Not Top-Down Or Bottom-Up

GUEST POST from Greg Satell

In a disruptive era, the only viable strategy is to adapt and that is especially true today. With change seeming to accelerate with each passing year, every organization must transform itself. Those who are unable to change often find that they are unable to compete and soon disappear altogether.

There has been a long running debate about whether change should be top-down or bottom-up. Some say that true change can only take hold if it comes from the top and is pushed through the entire organization. Others argue that you must first get buy-in from the rank-and-file before any real change can take place.

As I explain in Cascades, the truth is that transformation isn’t top-down or bottom-up, but happens from side-to-side. Change never happens all at once and can’t simply be willed into existence. It can only happen when people truly internalize and embrace it. The best way to do that is to empower those who already believe in change to bring in those around them

Identify your Apostles

All too often, change initiatives start with a big kickoff meeting and communication campaign. That’s almost always a mistake. In every organization, there are different levels of enthusiasm to change. Some will be ready to jump on board, but others will be vehemently opposed. To them, change is a threat.

So starting off with a big bang may excite some supporters, but it will also mobilize the opposition, who will try to undermine the effort—either actively or passively—before you have the chance to gain momentum. Before you know it, your initiative loses steam and change dies with it.

So a better strategy is to start by identifying your apostles—people who are already excited about the possibilities for change. For example, when Barry Libenson first started his movement to transform Experian’s digital infrastructure from a traditional architecture to the cloud, he didn’t announce a big campaign right away. Instead, he found early allies that he could start with.

They weren’t enough to drive change throughout the organization, of course, but they did allow him to start small-scale initiatives, such as building internal API’s. The success of those brought in others, who brought in others still.

Don’t Try To Convince — Empower

Anybody who has ever been married or had kids knows how difficult it can be to identify even a single person of something. Trying to convince hundreds or even thousands is truly a fool’s errand, which is why those kickoff meetings and communication campaigns have so little effect. Everybody brings their own biases and prejudices.

However, once you’ve identified your apostles, you can empower them to bring in others around them. Unlike top-down or bottom-up efforts, people generally have a pretty good idea which of their peers may be receptive. As the network theorist Duncan Watts put it to me, viral cascades are largely the result of “easily influenced people influencing other easily influenced people.”

The revolutionary movement Otpor put this principle to work through its strategy of recruit-train-act in their effort to bring down the Serbian dictator Slobodan Milošević. First, they would recruit new members, usually through tactics like pranks and street theatre. Then they would train those recruits. Finally, they would encourage new members to take an action, no matter how small, because action is how people take ownership of a movement.

Wyeth Pharmaceuticals took a similar approach in its effort to bring lean manufacturing techniques to 17,000 employees in its manufacturing operation. Rather than try to indoctrinate everyone all at once, it started with just a few teams in a few plants. Once those initiatives were successful, other teams were brought into the fold.

In both cases, the results were extraordinary. Within a few years, Milošević was ousted and would later die in his prison cell at The Hague. Wyeth Pharmaceuticals would cut costs by 25% within a year (the company was later sold to Pfizer).

Constrain Your Movement With Values

While peer-to-peer movements can be immensely powerful, they can also spin dangerously out of control. The Occupy movement, to take just one example, inspired thousands of people in over 951 cities across 82 countries to protest income inequality, but then fizzled out almost as fast. It accomplished little, if anything.

In a similar vein, Circuit City’s Superstore electronic store format spread like wildfire in the 1980s and gained a well-earned reputation for exceptional service. As Jim Collins reported in Good to Great, the company went to great trouble and expense to ensure that its salespeople were factory-trained. By 2000, however, the firm began to falter. It went bankrupt in 2008.

In both cases, a failure to indoctrinate values was at the core of the collapse. The Occupy protesters, while passionate, were also often vulgar and undisciplined, which turned off many others sympathetic to their cause. For Circuit City, investing in training was a strategy, not a core value, and was easily abandoned when profit margins were under pressure.

Values are important not because they are nice things to say, but because they represent constraints. If you value inclusiveness, you don’t shout down those that don’t agree with you and turn off others that do in the process. If you value service, then investing in training is more than just a line item on an income statement.

Make no mistake. Values, if they are to be anything more than platitudes, always come with costs. If you are unwilling to incur those costs, then it isn’t something you truly value.

Surviving Victory

In 2004 and 2005, I found myself in the middle of Ukraine’s Orange Revolution. At the heart of the issue was a falsified election and millions took to the streets to see that the rightful president, Viktor Yushchenko, was put in power. Yet even though it was truly a grassroots movement, its ethos was top-down.

“In 2005 everybody just disappeared and let Yushchenko do what he wanted,” Vitaliy Sych, editor of the popular newsmagazine Novoye Vremya, told me. “They thought he was some kind of magician and things were going to happen right away.” The movement soon flamed out and Ukraine descended once again into chaos.

In 2013, a similar uprising, called Euromaidan, erupted in Ukraine. But this time, rather than centered on any one person or objective, the movement was rooted in adopting European values. While the country still faces significant challenges, democratic norms are no longer in question. Its most recent election saw a peaceful transfer of power, rather than turmoil.

Irving Wladawsky-Berger made a similar point about IBM’s historic turnaround in the 1990s. “Because the transformation was about values first and technology second, we were able to continue to embrace those values as the technology and marketplace continued to evolve,” he told me.

That’s what’s key to successful transformations. The answer doesn’t lie in any specific strategy or initiative, but in how people are able to internalize the need for change and transfer ideas through social bonds. A leader’s role is not to plan and direct action, but to inspire and empower belief.

— Article courtesy of the Digital Tonto blog
— Image credit: Pexels

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4 Things Leaders Must Know About Artificial Intelligence and Automation

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4 Things Leaders Must Know About Artificial Intelligence and Automation

GUEST POST from Greg Satell

In 2011, MIT economists Erik Brynjolfsson and Andrew McAfee self-published an unassuming e-book titled Race Against The Machine. It quickly became a runaway hit. Before long, the two signed a contract with W. W. Norton & Company to publish a full-length version, The Second Machine Age that was an immediate bestseller.

The subject of both books was how “digital technologies are rapidly encroaching on skills that used to belong to humans alone.” Although the authors were careful to point out that automation is nothing new, they argued, essentially, that at some point a difference in scale becomes a difference in kind and forecasted we were close to hitting a tipping point.

In recent years, their vision has come to be seen as deterministic and apocalyptic, with humans struggling to stay relevant in the face of a future ruled by robot overlords. There’s no evidence that’s true. The future, in fact, will be driven by humans collaborating with other humans to design work for machines to create value for other humans.

1. Automation Doesn’t Replace Jobs, It Replaces Tasks

When a new technology appears, we always seem to assume that its primary value will be to replace human workers and reduce costs, but that’s rarely true. For example, when automatic teller machines first appeared in the early 1970s, most people thought it would lead to less branches and tellers, but actually just the opposite happened.

What really happens is that as a task is automated, it becomes commoditized and value shifts somewhere else. That’s why today, as artificial intelligence is ramping up, we increasingly find ourselves in a labor shortage. Most tellingly, the shortage is especially acute in manufacturing, where automation is most pervasive.

That’s why the objective of any viable cognitive strategy is not to cut costs, but to extend capabilities. For example, when simple consumer service tasks are automated, that can free up time for human agents to help with more thorny issues. In much the same way, when algorithms can do much of the analytical grunt work, human executives can focus on long-term strategy, which computers tend to not do so well.

The winners in the cognitive era will not be those who can reduce costs the fastest, but those who can unlock the most value over the long haul. That will take more than simply implementing projects. It will require serious thinking about what your organization’s mission is and how best to achieve it.

2. Value Never Disappears, It Just Shifts To Another Place

In 1900, 30 million people in the United States were farmers, but by 1990 that number had fallen to under 3 million even as the population more than tripled. So, in a manner of speaking, 90% of American agriculture workers lost their jobs, mostly due to automation. Still, the twentieth century was seen as an era of unprecedented prosperity.

We’re in the midst of a similar transformation today. Just as our ancestors toiled in the fields, many of us today spend much of our time doing rote, routine tasks. Yet, as two economists from MIT explain in a paper, the jobs of the future are not white collar or blue collar, but those focused on non-routine tasks, especially those that involve other humans.

Far too often, however, managers fail to recognize value hidden in the work their employees do. They see a certain job description, such as taking an order in a restaurant or answering a customer’s call, and see how that task can be automated to save money. What they don’t see, however, is the hidden value of human interaction often embedded in many jobs.

When we go to a restaurant, we want somebody to take care of us (which is why we didn’t order takeout). When we have a problem with a product or service, we want to know somebody cares about solving it. So the most viable strategy is not to cut jobs, but to redesign them to leverage automation to empower humans to become more effective.

3. As Machines Learn To Think, Cognitive Skills Are Being Replaced By Social Skills

20 or 30 years ago, the world was very different. High value work generally involved the retaining information and manipulating numbers. Perhaps not surprisingly, education and corporate training programs were focused on building those skills and people would build their careers on performing well on knowledge and quantitative tasks.

Today, however, an average teenager has more access to information and computing power than even a large enterprise would a generation ago, so knowledge retention and quantitative ability have largely been automated and devalued, so high value work has shifted from cognitive skills to social skills.

To take just one example, the journal Nature has noted that the average scientific paper today has four times as many authors as one did in 1950 and the work they are doing is far more interdisciplinary and done at greater distances than in the past. So even in highly technical areas, the ability to communicate and collaborate effectively is becoming an important skill.

There are some things that a machine will never do. Machines will never strike out at a Little League game, have their hearts broken or see their children born. That makes it difficult, if not impossible, for machines to relate to humans as well as a human can.

4. AI Is A Force Multiplier, Not A Magic Box

The science fiction author Arthur C. Clark noted that “Any sufficiently advanced technology is indistinguishable from magic” and that’s largely true. So when we see a breakthrough technology for the first time, such as when IBM’s Watson system beat top human players at Jeopardy!, many immediately began imagining all the magical possibilities that could be unleashed.

Unfortunately, that always leads to trouble. Many firms raced to implement AI applications without understanding them and were immediately disappointed that the technology was just that — technology — and not actually magic. Besides wasting resources, these projects were also missed opportunities to implement something truly useful.

As Josh Sutton, CEO of Agorai, a platform that helps companies build AI applications for their business, put it, “What I tell business leaders is that AI is useful for tasks you understand well enough that you could do them if you had enough people and enough time, but not so useful if you couldn’t do it with more people and more time. It’s a force multiplier, not a magic box.”

So perhaps most importantly, what business leaders need to understand about artificial intelligence is that it is not inherently utopian or apocalyptic, but a business tool. Much like any other business tool its performance is largely dependent on context and it is a leader’s job to help create that context.

— Article courtesy of the Digital Tonto blog
— Image credit: Pixabay

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When the Startup Romance Dies

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When the Startup Romance Dies

GUEST POST from Greg Satell

Every startup is exciting and romantic in the beginning. The founders usually know each other well and want to work together. They bring on others who are likeminded and committed to the mission of the enterprise. Long hours and shared experience makes the business feel less like work and more like a family.

Yet as the company grows and more people are brought on, the social fabric begins to fray. Roles, which once were fluid and interchangeable, begin to formalize and solidify. Tight camaraderie gives way to office politics. What was once a “family” begins to seem like just another place to work and earn a living.

The story is so common that nobody should be surprised when it happens, but inevitably most are, which is why few entrepreneurs prepare for it. Often, because they still feel connected to the senior team, they don’t even realize it’s happening until it’s too late. That’s a shame, because the breakdown of the family atmosphere can be avoided if you prepare for it.

The Dunbar Dilemma

In 1992, anthropologist Robin Dunbar published his groundbreaking paper on optimal group sizes. For humans, he estimated the maximum group size that can maintain stable relationships to be about 150, now known as the Dunbar Number. Other researchers using different methodologies have come up with slightly higher numbers, but the general principle stands. Go past a certain point and natural connections start to break down.

That’s why around when an organization hits 150-200 employees, the “family atmosphere” starts to break down and take on a decidedly more corporate feel. Early employees don’t feel the same bonds with the latecomers and new employees don’t build the same camaraderie when they join the company.

Inevitably, the change in atmosphere is attributed to the type of people hired, rather than the number of people in the organization. So the first step to solving the problem is to simply acknowledge that running a larger enterprise is different than running a small one. Culture will no longer take care of itself, you have to work to build and maintain it.

All too often, entrepreneurs attempt to reorganize the company at this point. That’s almost always a mistake. Valdis Krebs, who researches organizational networks, notes that reorganizations can often sever informal ties that you aren’t aware of but that are crucial to how the company functions.

The Importance Of Boundary Spanners

In the early 1970s, sociologist Mark Granovetter began researching how professional, technical and managerial workers found jobs in the Boston area. He was somewhat surprised to find that they often found work someone they knew, but not a close contact, like a friend or family member, but someone more removed, like a friend of a friend or a distant cousin. He called this principle the Strength of Weak Ties.

Further analysis shows why it works. Those who are closest to us know pretty much the same things we do, because they frequent similar places and do similar things. So if we want to gain access to new information, we need to broaden our scope and connect with people further out on the social spectrum.

In a small startup, the strength of weak ties plays a negligible role, because everybody knows each other through first-degree connections. However, once the Dunbar threshold of 150-200 people is passed, that’s no longer true. As the company grows, information increasingly needs to flow through second and third degree connections.

Network scientists call people who link disparate networks in an organization boundary spanners and they are crucial for maintaining culture as an organization grows. Once you understand the importance of boundary spanners, you can start redesigning programs and platforms to optimize for connection.

Redesigning Programs And Platforms For Connection

Every organizational culture is unique, so there are no hard and fast rules for designing programs and platforms to optimize for connection, but the best place to start is to build on what you already have. Often, companies accidentally find that an existing program that was built for another purpose effectively builds boundary spanners.

For example, Facebook originally designed its six week engineering bootcamp to help it scale by immersing new engineers in its methods and codebase, no matter what their level of experience. However, what it found was that bootcampers would build bonds during those six weeks that would persist long after they moved to disparate parts of the company.

In a similar vein, Experian found that its employees that participated in its “Le Tour de Experian” bike rides to benefit charity would build bonds that would span across organizational boundaries and lead to professional collaborations. So it built Employee Resource Groups and Clubs to build connections across a wider variety of interests.

Other companies, such as General Electric, encourage high potential executives to work in different divisions to create boundary spanners. Still others create seminars and best practice programs. There are many ways you can network your organization, once you learn to prioritize connections to build boundary spanners.

Evolving Leadership & Culture

In the early days of a startup most of the energy is necessarily focused on action items, such as developing a product, coming up with a go-to-market strategy and executing basic tasks. Job titles tend to be fluid and everybody pitches in where they can. With a small number of people, work can often be organized through quick huddles and whiteboard sessions.

Yet as the organization grows, more formal procedures and processes begin to take shape. Communication, necessarily, becomes more formal and less ad hoc. Roles within the company solidify and employees are increasingly expected to “stay in their lane.” Entrepreneurial leaders begin to spend less time focusing on the details of day-to-day execution.

This is when it is crucial for leaders to evolve from operational managers to what General Stanley McChrystal, in his book Team of Teams, calls “empathetic crafters of culture.” In a larger organization, a leaders role cannot be merely to plan and direct action, but needs to increasingly focus on shaping connections within the firm.

Perhaps most of all, entrepreneurs need to understand that the transition from a small startup to a significant enterprise doesn’t necessarily mean you have to lose “the family.” It just means that the leadership and culture need to evolve. That won’t simply happen all by itself. You have to put in the time and effort to make it so.

— Article courtesy of the Digital Tonto blog
— Image credit: Pixabay

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Embrace the Innovation Hate

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Embrace the Innovation Hate

GUEST POST from Greg Satell

“Don’t worry about people stealing your ideas,” said the computing pioneer Howard Aiken. “If your ideas are any good, you’ll have to ram them down people’s throats.” The truth is that any idea important enough to be valuable will be disruptive enough to inspire significant opposition to it ever gaining traction.

This phenomenon is often known as the Semmelweis Effect, after the Hungarian physician who pioneered hand washing in hospitals. Unfortunately, the medical establishment rejected his ideas and antiseptic procedures didn’t come into common use decades later. Millions of people died needlessly.

Yet as I’ve previously explained, much of the blame lays at Semmelweis’s door. Instead of taking into account valid criticisms of how he collected and communicated his data, he railed against the establishment, became a pariah and lost all credibility. The truth is that we need our critics, if for no other reason than that they have the power to save us from ourselves.

Exposing Flaws In Your Idea

One of the most effective programs for helping to bring discoveries out of the lab is I-Corps. First established by the National Science Foundation (NSF) to help recipients of SBIR grants identify business models for scientific discoveries, it has been such an extraordinary success that the US Congress has mandated its expansion across the federal government.

Based on Steve Blank’s lean startup methodology, the program aims to transform scientists into entrepreneurs. It begins with a presentation session, in which each team explains the nature of their discovery and its commercial potential. It’s exciting stuff, pathbreaking science with real potential to truly change the world.

Inevitably, during this initial session, they are asked, “how many customers have you talked to?” and, just as inevitably, their answer comes up woefully short. They are often yelled at and ordered to “get out of the building and talk to customers.” For many, it is a dressing down that they will never forget.

Ironically, much of the success of the I-Corps program is due to these early sessions. Once the entrepreneurs realize that they are on the wrong track, they embark on a crash course of customer discovery, interviewing dozens — and sometimes hundreds — of customers in search of a business model that actually has a chance of succeeding.

Make no mistake, every idea is flawed. As Steve Blank likes to say, “no business plan survives first contact with a customer.” So you want to expose as many flaws as you can before that happens.

Identifying Shared Values

In 1992, during the war in Bosnia, massive student protests broke out in Serbia. For 26 days, they demanded an end to the war and for the country’s authoritarian leader, Slobodan Milošević, to resign. Eventually, summer came, the students went home and little, if anything, was accomplished.

“These were very ‘Occupy’ type of protests,” Srdja Popović, one of the student leaders would later tell me,” where we occupied the five biggest universities and lived there in our little islands of common sense with intellectuals and rock bands while the rest of the country was more or less supportive of Milošević’s idea.”

Yet much like the I-Corps entrepreneurs, the activists learned from the experience. “We began to understand that staying in your little blurb of common sense was not going to save the country,” Popović remembers. In later years, the activists would learn to tailor their messages specifically to less educated rural Serbians who were turned off by the anti-war protests.

In much the same way, when developing a new product, it is often better to start with a minimum viable product rather than a full-featured prototype. You do this not so people can tell you how much they love your idea, but so they can tell you what they hate it and why. You have to get out of your own “little island” to find what people truly value.

They Can Send People Your Way

In the early hours of December 11, 2013, special police forces descended into the streets of Kyiv, Ukraine to violently assault peaceful activists protesting the Yanukovych regime. Known for their brutality, the units, called Berkut, cleared the streets and sent those gathered running to the shelter to the nearby St. Michaels Cathedral.

It proved to be a turning point, but not the one that Yanukovych expected. Mustafa Nayyem, who helped spark and then lead the protests, told me that the protests were losing steam and the brutal actions of the regime threw the support of the country their way. Yanukovych was forced out of office a few months later.

Often, your most fierce opponents can be your greatest asset. In his efforts to reform the Pentagon in the 1980s, Colonel John Boyd would start by doing low-key briefings to peers and then move on to congressional staffers. As his ideas gained steam, high-ranking generals would try to crush his efforts. Inevitably, they would overreach and he would gain even more support.

The key to leveraging your opposition is to not attack or even address them directly. Start by building the support of those who are already likely to be excited by the idea. As you gain traction, others will notice and join in. Eventually, your haters will feel they need to do something drastic and that will send even more people your way.

Whenever You Have A Big Idea, Someone’s Not Going To Like It

In researching my book, Cascades, I found that every successful transformational effort had a plan to overcome opposition. They didn’t dismiss their haters, but studied them, learned from them and were able to turn the disparagement to their own advantage. As the pressure increased, their opponents inevitably make a huge mistake that would turn the tide.

This is, of course, obvious in political and social movements, but I’ve found that it is just as important in corporate and organizational transformations. Make no mistake, if you want to drive anything more than incremental change, someone isn’t going to like it and they will work to undermine your efforts anyway they can. That is just a simple fact of life.

It is also something you can use to your advantage. Those who oppose your idea can point out flaws you may have missed. You can fix them. They help you expose underlying values that others may share as well. You can work to address them. As you build support, they are likely to lash out, creating an opening for you to win the day.

All too often, we end up preaching to the choir instead of venturing out of the church and mixing with the heathens. That’s how change efforts fail. So don’t ignore your haters. Embrace them. Learn from them. They can provide the key to driving transformation forward.

— Article courtesy of the Digital Tonto blog
— Image credit: Pixabay

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Four Questions That Make Better Innovators

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Four Questions That Make Better Innovators

GUEST POST from Greg Satell

In 1999, the day before his eighth startup went public, Steve Blank decided to retire at the age of 45. With time to reflect, he sat in a ski lodge and began to write a memoir with a “lessons learned” section at the end of each chapter. “In hindsight, it was a catharsis of moving from one part of my life to another,” he later told me.

“I was 80 pages in when I realized there was a pattern. When I sat inside the building things didn’t go very well, but when I got outside the building things turned around and got much better,” he remembered. What he meant was that it was only when he got out and talked to customers that he could really get a handle on the business.

We like to think that innovation is about ideas, but it’s really about solving problems. In order to surface problems, you need to ask questions, which is why Steve’s businesses started doing better when he got out of the building to talk to customers. The better questions you ask, the better problems you can identify. Here are four questions that will help you do that.

1.Why?

Problems come in all shapes and sizes. Some problems are relatively minor and can be worked around. Others are more fundamental and represent serious impediments to effective operations. Clearly, the more fundamental the problem you can identify, the greater the impact you can create by solving it.

One very effective technique to do that is called the 5 Whys. For example, when NY Times columnist Charles Duhigg noticed that however much he and his wife wanted to get home on time to eat dinner with their kids, they inevitably ended up getting caught up at work and arriving home late, he began to ask “why?”

The first “why” of he and his wife arriving late to dinner was because they had work to finish. Why? Because there were pesky little tasks, like responding to emails, that they needed to get done. Why? Because they couldn’t get to them during the day. Why? Because they arrived at work just before their first meeting. Why? Because they were busy getting the kids ready for school.

By the fifth “why” he realized that the problem wasn’t so much that they got caught up at work, but that it took too long to get the kids ready for school. The conundrum was solved by having the kids lay out their clothes for school the night before. The Duhiggs soon began having family dinners regularly.

It’s an incredibly powerful technique. Each why takes you a bit deeper into the problem and, as you begin to identify root causes, you’ll be able to come up with more effective solutions.

2. Where’s The Monkey?

When I work with executives, they often have a breakthrough idea they are excited about. They begin to tell me what a great opportunity it is and how they are perfectly positioned to capitalize on it. However, when I begin to dig a little deeper it appears that there is some big barrier to making it happen. When I try to ask about that, they just shut down.

One reason that this happens is that there is a fundamental tension between innovation and operations. Operational executives tend to focus on identifying clear benchmarks to track progress. That’s fine for a typical project, but when you are trying to do something truly new and different, you have to directly confront the unknown.

At Google X, the tech giant’s “moonshot factory,” the mantra is #MonkeyFirst. The idea is that if you want to get a monkey to recite Shakespeare on a pedestal, you start by training the monkey, not building the pedestal, because training the monkey is the hard part. Anyone can build a pedestal.

The problem is that most people start with the pedestal, because it’s what they know and by building it, they can show early progress against a timeline. Unfortunately, building a pedestal gets you nowhere. Unless you can actually train the monkey, working on the pedestal is wasted effort.

3. How Will We Fail?

Innovation is not a mere intellectual endeavor. It’s highly emotional. You thrive on your hopes and dreams. That’s what keeps you going and helps you block out doubts, both your own and those of others. Failure is just not something you want to contemplate. It’s just too painful.

Yet thinking seriously about failure can actually help you succeed and there are two techniques that can help you do that productively. The first, called pre-mortems, asks you to imagine that the project has failed and figure out why it happened. The second, called red teaming sets up an independent team to find flaws in the idea.

The idea isn’t to figure out ways to kill the project, but to identify holes to be plugged. For example, when the Obama administration thought it had identified Osama bin Laden’s hideout, it set up a red team to challenge the evidence. Because the red team had no emotional attachment to the initial analysis, they were able to look at it far more objectively.

As we now know, the raid on bin Laden’s compound went ahead, but the red team was able to raise important questions that strengthened the plan. To successfully innovate, you need to do the same. Identify every potential for failure that you can so that you can address those issues before going forward.

4. What Kind Of Problem Are We Trying To Solve?

Go to any innovation conference and you will undoubtedly see a wide variety of innovation experts championing their favored strategy and each will have stories that will amaze you. Design thinking, disruptive innovation, lean startup methods and open innovation have all become buzzwords because they have produced real results.

Yet none of them is a cure-all. Each performs well with some classes of problems, but not so well in others. That’s why in my book, Mapping Innovation, I advocated using the whole innovation toolbox. The trick is to match the right type of problem with the right type of solution.

Innovation Matrix Greg Satell

The truth is that there is no one “true” path to innovation. Many organizations get stuck because they end up locking themselves into a single strategy. They find something that works and say, “this is how we innovate” and end up trying to apply essentially the same solution no matter what the problem is. Eventually, that ends badly.

That’s why it’s so important to ask good questions. Every problem is, to some extent, unique. You can’t simply assume you know the solution beforehand. That’s why Steve Blank’s businesses failed when he stayed “in the building” and prospered when he got out of it. If you want to become a better innovator. Ask better questions.

— Article courtesy of the Digital Tonto blog
— Image credit: Pixabay

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How Networks Power Transformation

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How Networks Power Transformation

GUEST POST from Greg Satell

In February 2004, Viacom announced that it would spin off Blockbuster Video into its own independent company, which gave its CEO, John Antioco, the opportunity to begin addressing the disruptive threat emanating from Netflix head on. He developed a viable strategy, executed it well, but in the end his efforts were for naught.

Around the same time General Stanley McChrystal was tapped to take command of Special Forces in Iraq. Much like Antioco and Blockbuster, he faced a disruptive threat in the form of Al Qaeda that, using unconventional tactics, threatened to thwart his efforts. Unlike Antioco, however, McChrystal succeeded brilliantly.

We tend to think about transformation in terms of strategy and tactics, but if that was all there was to it, Blockbuster would still be thriving today. As I explain in Cascades, the difference between Antioco and McChrystal wasn’t that one had a good plan and the other didn’t, but that McChrystal saw that he had to rewire the networks in his organization.

Why Blockbuster Really Failed

Today, Blockbuster is a cautionary tale, but for all the wrong reasons. When the spinoff was announced, Antioco moved quickly to build an online rental business and remove the late fees that so many found annoying. Later, in 2006, he created the Total Access program that allowed customers rent DVDs online and return them in stores.

The convenience of the Total Access program was something that Netflix couldn’t match and almost immediately Blockbuster began to surpass Netflix in adding new subscribers. Yet within a few months, a compensation dispute arose between Antioco and the corporate raider Carl Icahn, who had gotten control of the company. Antioco left, the new CEO reversed the strategy and Blockbuster declared bankruptcy in 2010.

The tensions had actually been building for some time. Antioco’s shift to the online business made franchisees, many of whom had their life’s savings tied up in Blockbuster stores, uneasy. The changes were also costly, which depressed earnings and made investors and analysts skeptical. The stock price cratered.

It was the low stock price that led Icahn to buy up stock in Blockbuster, a proxy fight that allowed him to take control of the company’s board, the compensation dispute, Antioco’s departure and the reversal of the strategy. What really killed Blockbuster wasn’t external competition, but internal opposition.

Addressing The Internal Struggle

While Antioco framed the challenge Blockbuster faced largely in terms of strategy and tactics, McChrystal saw his task as an internal struggle. His forces were among the best in the world and were winning every battle. Yet somehow, they were losing the war and losing it badly.

As McChrystal would later write, “the world had outpaced us. In the time it took us to move a plan from creation to approval, the battlefield for which the plan had been devised would have changed. By the time it had been implemented, the plan—however ingenious in its initial design—was often irrelevant.”

So instead of trying to come up with better plans, McChrystal sought to change how his organization functioned. The problem, as he saw it, was one of interoperability. His forces needed not only to work with each other, but also partner agencies and other stakeholders, in order to succeed.

“I needed to shift my focus from moving pieces on the board to shaping the ecosystem,” McChrystal would remember. The moves paid off. The tide of the war soon shifted and the forces under his command would achieve their major objectives.

Rewiring Networks

The main difference between Antioco and McChrystal had less to do with their actions than it did with their mindsets. Where Antioco saw his task in terms of planning and execution, McChrystal saw his in terms of connection. “We began to make progress when we started looking at these relationships as just that: relationships— parts of a network, not cogs in a machine or outputs and inputs,” he would later write.

Antioco would take a very different approach. He set up the Blockbuster Online team in a warehouse down the street its Dallas headquarters. That allowed him to pursue the online strategy with little disruption to operations in the core business, but it also allowed suspicion and fear to fester and grow.

McChrystal, on the other hand, moved to forge links anywhere he could. He started embedding intelligence analysts into commando teams and vice versa. Liaison officer positions, traditionally given to marginal performers or those nearing retirement, were now earmarked for the very best operators.

Moves like these slowed down the individual teams — commandos in business suits placed at embassies don’t kill many terrorists — but that wasn’t the point, building networks of trust and interoperability was. Over the next few years, the effectiveness of his organization improved markedly and overall operating efficiency improved by a factor of seventeen.

Rethinking Leadership For A Networked Age

To a large degree, the most important difference between Antioco and McChrystal was how they saw their role as leaders. Antioco was truly a brilliant strategist and had built an enormously successful career devising effective plans and driving efficient execution. He had encountered opposition before, but had always been able to prevail by showing results.

McChrystal came to see things differently. “I began to reconsider the nature of my role as a leader,” he would later write. “The wait for my approval was not resulting in any better decisions, and our priority should be reaching the best possible decision that could be made in a time frame that allowed it to be relevant.

In other words, where Antioco saw a vertical hierarchy for carrying out tasks efficiently, McChrystal saw a horizontal network of connections which needed to be cultivated. Where Antioco built a strong senior management team to drive his strategy, McChrystal forged shared values throughout his organization so that units could act independently.

The truth is that we need to reimagine leadership for a networked age to focus less on driving strategy and tactics and more on widening and deepening connections in networks. Or, as McChrystal put it, “The role of the senior leader was no longer that of a controlling puppet master, but that of an empathetic crafter of culture.

— Article courtesy of the Digital Tonto blog
— Image credit: Pixabay

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Are We Abandoning Science?

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Are We Abandoning Science?

GUEST POST from Greg Satell

A recent Pew poll found that, while Americans generally view scientific expertise in high regard, there are deep pockets of mistrust. For example, less than half of Republicans believe that scientists should take an active role in policy debates and significant minorities question the transparency and integrity of scientific findings.

An earlier study done by researchers at Ohio State University found that, when confronted with scientific evidence that conflicted with their pre-existing views, such as the reality of climate change or the safety of vaccines, partisans would not only reject the evidence, but become hostile and question the objectivity of science.

This is a major problem, because if we are only willing to accept evidence that agrees with what we already think we know, we are unlikely to advance our understanding. Perhaps even worse, it opens us up to being influenced by pundits —those with strong opinions but questionable expertise. When we turn our backs on science, we turn our backs on truth.

The Rise Of Science

When René Descartes wrote “I think, therefore I am” in the mid 1600s, he was doing more than coining a clever phrase, he was making an argument for a rational world ruled by pure logic. He believed that you could find the answers to problems you needed to solve merely by thinking about them clearly.

Yet Descartes and his rational movement soon ran out of steam. Many of the great minds that followed, such as John Locke and David Hume, took a more empirical view and argued that we can only truly understand the world around us through our experiences, however flawed and limited they may be.

It was this emphasis on experiences that led us to the concept of expertise. As the Renaissance and the Enlightenment gave way to the modern world, knowledge became specialized. It was no longer enough to think about things, the creation of knowledge came to be seen as arising from a scientific process of testing hypotheses through experiment.

This was a major shift, because you could no longer simply argue about things like how many angels could fit on the head of a pin, you actually had to put your thoughts to the test. Others could then examine the same evidence and see if they came to the same conclusions as you did. Thinking about things wasn’t enough, you had to show that they worked in the real world.

The Soccer Ball You Can’t See

Science is a funny thing, full of chance discoveries, strange coincidences and unlikely moments of insight. In his book, The God Particle, the Nobel prizewinning physicist Leon Lederman tells a metaphorical story about an alien race watching a soccer game to illustrate how it is practiced.

These aliens are very much like humans except that they can not see black and white patterns. If they went to a soccer game, they would be utterly confused to see a bunch of guys running around a field for no apparent reason. They could come up with theories, formulas and other conjectures, but would fail to make useful predictions.

Eventually, one might notice a slight bulge in the net of the goal just as the crowd erupted in a cheer and come up with a crazy idea about an invisible ball. Through further observation, they could test the hypothesis and build evidence. Although they could never actually see the ball, they could catalogue its effects and use them to understand events.

His point is that science is not common sense. It deals with things that we do not directly experience, but nevertheless have concrete effects on the world we live in. Today, we live in a world of the visceral abstract, where oddball theories like relativity result in real innovations like microprocessors and the Internet.

Cargo Cult Science

Because so much of science deals with stuff we can’t directly experience, we need metaphors like Lederman’s story about the aliens to make sense of things. Part of the fun of science is letting your imagination run wild and seeing where things go. Then you can test those ideas to see if they actually reflect reality.

The problem is that pundits and flakes can do the same thing — let their imagination run wild — and not bother to test whether they are true. Consider the anti-vax movement, which has no scientific basis, but has gone viral and led to a resurgence of diseases that were nearly extinct. Nevertheless, dressed up in some scientific sounding words, the idea that vaccines cause disease in children can be very convincing.

The physicist Richard Feynman called this cargo cult science, after a strange phenomenon that takes place on some islands in the South Pacific in which some tribes try to mimic the use of technology. For example, they build mock airstrips in the hopes that airplanes would appear with valuable cargo.

What makes science real is not fancy sounding words or white lab coats, but the fact that you work under certain constraints. You follow the scientific method, observe professional standards and subject your work to peer review. Pundits, on the other hand, do none of these things. Simply having an opinion on a subject will suffice.

The New Mysticism

Clearly, science is what created the modern world. Without science, you cannot have technology and without technology, you cannot create prosperity. So, on purely economic terms, science is extremely important to our success as a society. We need science in order to progress.

Yet in broader terms, science is the search for truth. In a nutshell, science is the practice of coming up with testable statements to see what’s possible. That’s what separates Darwin’s theory of natural selection and the big bang from nonscientific theories. The former is a matter of science, which can be tested through experiment and observation, the latter a matter of faith and belief.

Consider what Marco Rubio said in an interview with GQ about the age of the universe a few years ago:

“I think the age of the universe has zero to do with how our economy is going to grow. I’m not a scientist. I don’t think I’m qualified to answer a question like that. At the end of the day, I think there are multiple theories out there on how the universe was created and I think this is a country where people should have the opportunity to teach them all.”

Yet the big bang is not just a theory, but the result of a set of theories, including general relativity and quantum mechanics, combined with many observations over a period of decades. Students in physics class are supposed to learn about the big bang not to shape their religious beliefs, but because of its importance to those underlying theories.

And those concepts are central to our everyday lives. We use relativity to calibrate GPS satellites, so that we can find restaurants and target missiles. Quantum mechanics gave us lasers and microprocessors, from which we make barcode scanners and iPhones. In fact, the theories underlying big bang are essential for our modern economy to function.

When we turn our backs on science, what we are left with is essentially a form a mysticism. We can listen to our inner voices to decide what we believe and, when faced with a competing idea, ascribe its provenance to only someone else’s inner voice. Once we make truth a matter of opinion, we start our way down a slippery slope.

— Article courtesy of the Digital Tonto blog
— Image credit: Pixabay

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The Shareholder Value Myth

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The Shareholder Value Myth

GUEST POST from Greg Satell

The Business Roundtable, an influential group of almost 200 CEOs of America’s largest companies, a few years ago issued a statement that discarded the old notion that the sole purpose of a business is to provide value to shareholders. Instead, it advocated serving a diverse group of stakeholders including customers, employees, suppliers and communities.

The idea is not a new one. In fact, Jack Welch once called shareholder value the dumbest idea in the world. Nevertheless, The Wall Street Journal opinion page immediately pounced, suggesting that the move was just an attempt to “appease the socialists” and that it would undermine financial accountability.

It’s hard to see how acknowledging accountability to stakeholders other than investors would undermine accountability to investors. Shareholders, after all, have the power to fire CEOs. Even more importantly though, the notion that performance can be reduced down to a single metric is foolhardy and dangerous. Managing a business is simply tougher than that.

The Principal-Agent Problem

Every business seeks to make a profit. Ones that do not achieve that basic requirement do not stay in business for long. However, that doesn’t mean that the only reason a business exists is to make money. Clearly, in order to earn a profit over the long term, you need to provide value for others. Anybody who has ever run a business knows this.

Yet a large corporation is very different from an ordinary business in that there is what’s known as a principal-agent problem. The shareholders are a dispersed group that have relatively little information, while the managers of the business are a small group with an asymmetric informational advantage.

So you can see how the concept of shareholder value can be attractive. If you can reduce performance down to a single metric, such as stock performance, then the principal-agent problem is solved. Shareholders, as principal owners of the company, can hold managers, as their agents, accountable.

Yet this is a fantasy. There are many things that a manager can do, such as reducing investment or making a lot of sexy acquisitions, that can increase short-term financial performance, but hurt performance in the long run. So the concept of shareholder value has always been a murky one.

From Value Chains To Ecosystems

For decades, the dominant view of strategy was based on Michael Porter’s ideas about competitive advantage. In essence, he argued that the key to long-term success was to dominate the value chain by maximizing bargaining power among suppliers, customers, new market entrants and substitute goods.

Yet there was a fatal flaw in the notion that wasn’t always obvious. In an industrial economy, where technology is relatively static, value chains are stable. However, in a fast moving information economy, firms increasingly depend on ecosystems to compete. That drastically changes the game.

Ecosystems are nonlinear and complex. Power emanates from the center instead of at the top of a value chain. You move to the center by connecting out. So while an industry giant may possess significant bargaining power, exercising that bargaining power can be problematic, because it can weaken links to other nodes in the ecosystem.

So the increased emphasis on stakeholders is not merely some newfound socialistic altruism, but a realistic strategic shift. In a networked-driven world you need to continually widen and deepen links to other stakeholders within the ecosystem. That’s how you gain access to resources like talent, technology and information.
Building Power Through Gaining Trust

In a famous 1937 paper, Nobel Prize winning economist Ronald Coase argued that the function of a firm was to minimize transaction costs, especially information costs. For example, it makes sense to keep employees on staff, even if you might not need them today, so that you don’t need to search for people tomorrow when a job comes in.

Another way to minimize transaction costs is through building trustful relationships. If the stakeholders within ecosystems that you operate trust you, you gain greater access to information and decrease the amount of resources you need to spend on enforcing formal and informal norms. In fact, a study from Accenture Strategy recently found that building trust with stakeholders is increasingly becoming a competitive advantage.

In The Good Jobs Strategy MIT’s Zeynep Ton found that investing more in well-trained employees can actually lower costs and drive sales in the low-cost retail industry. While the sector is often thought of as highly transactional, her research indicates that a dedicated and skilled workforce results in less turnover, better customer service and greater efficiency.

For example, when the recession hit in 2008, Mercadona, Spain’s leading discount retailer, needed to cut costs. But rather than cutting wages or reducing staff, it asked its employees to contribute ideas. The result was that it managed to reduce prices by 10% and increased its market share from 15% in 2008 to 20% in 2012.

In other cases, competitors collaborate to improve their industrial ecosystems for customers. So it is should not be surprising that firms are increasingly investing in structures that are focused on ecosystems, such as Internet of Things Consortium, Partnership on AI and the Manufacturing Institutes. Again, power in an ecosystem resides at the center, not at the top, so to compete you have to connect.

Clearly, it could be argued that by investing in these partnerships, business are increasing shareholder value. However, to do so would be to essentially argue that investing in stakeholder ecosystems and pursuing shareholder value are equivalent, which reduces the debate to one of semantics rather than substance.

Manage For Mission, Not For Metrics

Perhaps one of the most interesting lines in the Business Roundtable statement was the assertion that “each of our individual companies serves its own corporate purpose,” because it acknowledges that the notion of purpose can’t be reduced to a single concept or metric.

Historically, the lines between industries were fairly clear-cut. Ford competed with GM and Chrysler. Later, foreign competition became more important, but the basic logic of the industry remained fairly stable: you produced cars and sold them to the public through a network of dealers.

Today, however, industry lines have blurred considerably. A company like Amazon competes with Walmart in retail, Microsoft, IBM and Google in cloud computing, and Netflix and Warner Media in entertainment. The company itself is much more than simply a bundle of operations competing in different value chains, but a platform for accessing a variety of ecosystems of talent, technology and information.

In much the same way, automobile manufacturers are making investments to transform themselves into mobility companies. To do so, they are building ecosystems made up of technology giants, startups and others. They are not seeking to “maximize bargaining power,” but rather to prepare for a future that hasn’t taken shape yet.

That’s why today, business leaders need to manage for mission, not for metrics. Building trustful relationships among a diverse set of stakeholders may not be as simple or as clear cut as “maximizing shareholder value,” but it’s increasing what profit-seeking businesses need to do to compete.

— Article courtesy of the Digital Tonto blog
— Image credit: Pixabay

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What I Learned Solving a Business Crisis

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What I Learned Solving a Business Crisis

GUEST POST from Greg Satell

By 2006 we knew we had a serious problem. Our company’s onetime flagship product, called Afisha, was in a steady decline and it was becoming all too clear that something had to be done. What had once been a market leader that generated huge profits, which fueled the growth of our company had slowly, but surely, lost its market position.

It was clear that the business was in crisis, but nobody was exactly sure what to do about it. Operationally, nothing had really changed. We still believed in our product and our people. Nevertheless, the marketplace had evolved and our business model, which once had seemed bulletproof, was no longer viable.

We didn’t know it at the time, but Afisha’s brightest days were still ahead. We were able to reimagine the business model, strengthen the brand and return to profitability. What we learned is that solving a crisis is not a straightforward linear process, but a journey of discovery. You never know what you’ll find so you need to be willing to experiment.

Acknowledging The Problem

As I explained in Mapping Innovation, when Afisha came out in 2000, it was an immediate hit. At its core, it was simply a guide to restaurants, nightlife and other entertainment, somewhat similar to Timeout. Its restaurant, music and movie columnists quickly became tastemakers in Kyiv, while its sex advice column, achieved a cult-level status. Ad dollars soon came rolling in

In 2006, all of those elements that had made Afisha successful were still in place, but the business environment had changed significantly. The ad market, which had been worth less than $100 million dollars in 2000, was now quickly approaching a billion dollars. Strong multinational publishers like Hearst, Hachette and Rodale had begun investing heavily into Ukrainian versions of top international titles like Cosmopolitan, Elle and Men’s Health.

What we had to accept was that Afisha, although still popular with readers, was no longer a dominant brand. At the same time, the free distribution model which it had once depended on to quickly achieve wide readership was now seen as a liability among advertisers. That diminished our ability to command top ad rates while, at the same time, the booming media market sent our editorial costs through the roof.

None of this happened all at once, so it was easy to believe that Afisha was just going through a temporary downturn. It was only when we were able to acknowledge that our once-successful model had become fundamentally broken that we were able to start moving forward.

Assembling A Broad-Based Team

Once we had acknowledged the problem we assembled a meeting to come up with a strategy to move forward. This included the publisher and editor-in-chief of Afisha, several of the key staff, our company founder, me (as CEO) as well as several company leaders outside of Afisha who had specific knowledge and skills and who were widely respected.

The composition of the meeting was important. Clearly, the Afisha team had to be deeply involved in the process. Having the company founder and me there made it clear that the business had the full backing of the executive leadership. However, in many ways, it was those outside the core Afisha team who had critical impacts.

For the Afisha team and the executive leadership, the business model was so familiar it seemed almost like second-hand. Bringing in other leaders from around the company helped us look at the business in new ways. They asked questions that challenged us, made observations that we hadn’t seen and suggested things that wouldn’t have occurred to us.

Identifying Issues And Developing Options

As the working group met and got down to business, we began to identify problems. First, as noted above, the competitive landscape had shifted dramatically and, although Afisha remained a beloved brand, international titles had taken away significant market share. Second, the free distribution model was no longer financially viable.

As we discussed options, we were able to quickly build consensus on two actions. We would redesign the magazine and the website to beef up the editorial content and better compete with the international titles. We would also look for partners to license Afisha to other cities in Ukraine and create a more national brand.

We also came up with a third option that was considerably more speculative. For years, we had been giving paid subscribers Afisha cards to receive discounts at local merchants. We thought that we could add value to the card by creating an event calendar that was exclusive to Afisha card holders.

Our reasoning was that if we could increase subscribers through upgrading the Afisha card, we could reduce our reliance on free distribution and improve the economics of the business. It seemed like a longshot, but it was also low risk. All we had to do was sign up some partners for events and publish an event calendar in the magazine and on the website.

Finding The Unexpected

The editorial and licensing strategies, which seemed like no brainers, were, at best, mildly successful. Readers seemed to like the new design and expanded editorial content, but then again they liked the old Afisha too. We were able to set up licenses for five major Ukrainian cities, giving up close to national coverage, but the licensees struggled to earn a profit.

The Afisha card strategy, on the other hand, was an unexpected hit. We had hoped to be able to do one event a week, but were soon so deluged with partners that we had to limit events to one per day. From happy hours and shopping nights to club openings and movie festivals, it seemed like everybody wanted to work with us.

Before we knew it, we were able to upgrade events from a promotional activity to a seriously profitable business. We organized a nationwide Frisbee contest for a beer launch, a French movie festival for an upscale coffee brand and organized party trips with sponsors. To our amazement, the business just grew and grew.

What we learned from the experience is that you can’t plan your way out of a crisis. If we were able to plan effectively, we wouldn’t have been in the crisis in the first place. Our success wasn’t the product of our own brilliance, but our willingness to experiment. That’s how we came across the “happy accident” that led to the events business.

The truth is that it takes some bad luck to get into a crisis and it takes some good luck to get out of one. Sound management can help stem the bleeding, but if you are ever going to rebuild a successful business, you have to experiment and allow for the unexpected.

— Article courtesy of the Digital Tonto blog
— Image credit: Pixabay

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Reasons Change Management Frequently Fails

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Reasons Change Management Frequently Fails

GUEST POST from Greg Satell

In 1983, McKinsey consultant Julien Phillips published a paper in the journal Human Resource Management that described an “adoption penalty” for firms that didn’t adapt to changes in the marketplace quickly enough. His ideas became McKinsey’s first change management model that it sold to clients.

So it is notable, to say the least, that in 2015, more than 35 years later, McKinsey found that only 26% of organizational transformations succeed. It’s not hard to see why. While traditional change management models offer sensible frameworks for fairly obvious changes, truly transformational efforts almost always encounter fierce resistance.

That’s an important distinction that leads to a significant difference. As I found when researching my book, Cascades, successful transformations identify resistance from the start and effectively plan to overcome opposition. Clearly, today, when change is so often a matter of survival, traditional change management models are no longer enough.

Preparing For Resistance

The change management industry was developed to solve a particular and discrete problem. While there were clear and coherent models for other critical business functions, such as marketing and finance, there was a relative dearth of models to help drive change. Phillips’ model and those that came after sought to fill that gap.

Yet as the McKinsey data clearly shows, those models have not been widely successful and it’s not hard to see why. Much as any competitive strategy that doesn’t anticipate the response from competitors is doomed to failure, any transformation strategy that doesn’t take into account those who oppose change is unlikely to succeed.

In my research, however, I found that when resistance is anticipated and accounted for, transformational efforts can achieve astounding results. At Wyeth Pharmaceuticals, the team implemented lean manufacturing techniques across 17,000 employees and cut costs by 25%. At Experian, CIO Barry Libenson shifted its entire technological infrastructure to the cloud and improved profitability across the entire company.

What made the difference is that in both cases, those leading the transformation didn’t assume that the changes would be embraced. In fact, just the opposite. They expected resistance and built a plan to overcome it.

Mapping The Terrain

Traditional change management models start with steps that encourage communicating the need for change and building a sense of urgency. Yet that can often backfire. While communication efforts can and often do excite many about the prospect for transformation, they also alert the opposition to step up their efforts to undermine change.

So the first step is to map the terrain upon which the battle for change will be fought (and make no mistake, any significant transformation effort is always a battle). There are two tools, borrowed from nonviolent political movements, that can help you do this: The Spectrum of Allies and the Pillars of Support. Both have been battle tested for decades.

The Spectrum of Allies, helps you identify which people are active or passive supporters of the change you want to bring about, which are neutral and which actively or passively oppose it. Once you are able to identify these groups, you can start mobilizing the most enthusiastic supporters to start influencing the other groups to shift their opinions. You probably won’t ever convince the active opposition, but you can isolate and neutralize them.

The Pillars of Support identifies stakeholder groups that can help bring change about. Some of these may be internal stakeholders, such as business units or functional groups within an organization. However, some of the most important stakeholders are often external, such as customer groups, industry associations, regulators and so on.

At this point, you are still planning, rather than implementing change. Most of all, you are listening and remain respectful of others who don’t hold the same views you do. The information you gather in these early stages will be critical for overcoming resistance later on.

The Myth of A Quick Win

One of the key tenets of change management is the need to achieve some quick, short term wins to help build momentum. The truth is that these types of objectives are often not meaningful to many, if not most, key stakeholders. In fact, they can often signal to those skeptical of change that the initiative is not serious.

In my research, I found that every successful transformation I studied identified a keystone change which had a clear and tangible goal, involved multiple stakeholders and paved the way for greater change down the road. Because these require the involvement of multiple stakeholders, they are never quick or easy.

For example, in the Wyeth transformation noted above, the keystone change was to reengineer factory changeovers, a difficult and complex task. In Experian’s shift to cloud technology, the keystone change was to build internal API’s. During Lou Gerstner’s historic turnaround at IBM in the 90s, he sought to shift the company from a “proprietary stack of technologies” to its “customers’ stack of business processes.”

In each case, key constituencies in the Spectrum of Allies were mobilized to influence key institutional stakeholders in the Pillars of Support. That takes time, patience and no small amount of effort. In some cases, it took a few tries to identify a keystone change that could succeed.

Every Revolution Inspires Its Own Counter-Revolution

Many change management efforts start with a large kickoff, complete with a vigorous communication campaign designed to create a sense of urgency and rally the troops. What’s often overlooked is that these efforts often alert those who are opposed to change that they need to begin undermining change efforts before they gain momentum.

As the change efforts gain momentum, these undermining efforts may quiet somewhat, but they very rarely disappear, even after the goals of the transformation have already been achieved. For example, at Blockbuster Video, initial efforts to address the disruptive threat posed by Netflix were successful, but that strategy was quickly reversed when a new CEO came aboard.

That’s why it’s crucial that you set out from the beginning to survive victory and you do that by rooting your efforts not in specific goals or objectives, but in common values. As Irving Wladawsky-Berger, a key player in IBM’s historic turnaround, told me, “Because the transformation was about values first and technology second, we were able to continue to embrace those values as the technology and marketplace continued to evolve.”

Perhaps most of all, you need to remember that there’s a reason that the vast majority of transformational efforts fail: Change is hard and it can’t be easily managed. Yet history has shown that it can be achieved, even under the worst conditions and against the greatest odds, if you learn to anticipate and overcome those who would seek to undermine it.

— Article courtesy of the Digital Tonto blog
— Image credit: Pixabay

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