Tag Archives: McKinsey

Change Management Needs to Change

Change Management Needs to Change

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.

But consider that research shows in 1975, during the period Phillips studied, 83% of the average US corporation’s assets were tangible assets, such as plant, machinery and buildings, while by 2015, 84% of corporate assets were intangible, such as licenses, patents and research. Clearly, that changes how we need to approach transformation.

When your assets are tangible, change is about making strategic decisions, such as building factories, buying new equipment and so on. Yet when your assets are intangible, change is connected to people—what they believe, how they think and how they act. That’s a very different matter and we need to reexamine how we approach transformation and change.

The Persuasion Model Of Change

Phillips’ point of reference for his paper on organizational change was a comparison of two companies, NCR and Burroughs, and how they adapted to changes in their industry between 1960 and 1975. Phillips was able to show that during that time, NCR paid a high price for its inability to adapt to change while it’s competitor, Burroughs prospered.

He then used that example to outline a general four-part model for change:

  • Creating a sense of concern
  • Developing a specific commitment to change
  • Pushing for major change
  • Reinforcing and consolidating the new course

Phillips’ work kicked off a number of similar approaches, the most famous of which is probably Kotter’s 8-step model. Yet despite the variations, the all follow a similar pattern. First you need to create a sense of urgency, then you devise a vision for change, communicate the need for it effectively and convince others to go along.

The fundamental assumption of these models, is that if people understand the change that you seek, they will happily go along. Yet my research indicates exactly the opposite. In fact, it turns out that people don’t like change and will often work actively to undermine it. Merely trying to be more persuasive is unlikely get you very far.

This is even more true when the target of the change is people themselves than when the change involves some sort of strategic asset. That’s probably why more recent research from McKinsey has found that only 26% of organizational transformations succeed.

Shifting From Hierarchies To Networks

Clearly, the types of assets that make up an enterprise aren’t the only thing that has changed over the past half-century. The structure of our organizations has also shifted considerably. The firms of Phillips’ and Kotter’s era were vlargely hierarchical. Strategic decisions were made at the top and carried out by others below.

Yet there is significant evidence that suggests that networks outperform hierarchies. For example, in Regional Advantage AnnaLee Saxenian explains that Boston-based technology firms, such as DEC and Data General, were vertically integrated and bound employees through non-compete contracts. Their Silicon Valley competitors such as Hewlett Packard and Sun Microsystems, on the other hand, embraced open technologies, built alliances and allowed their people to job hop.

The Boston-based companies, which dominated the microcomputer industry, were considered to be very well managed, highly efficient and innovative firms. However, when technology shifted away from microcomputers, their highly stable, vertical-integrated structure was completely cut off from the knowledge they would need to compete. The highly connected Silicon Valley firms, on the other hand, thrived.

Studies have found similar patterns in the German auto industry, among currency traders and even in Broadway plays. Wherever we see significant change today, it tends to happen side-to-side in networks rather than top-down in hierarchies.

Flipping The Model

When Barry Libenson first arrived at Experian as Global CIO in 2015, he knew that the job would be a challenge. As one of the world’s largest data companies, with leading positions in the credit, automotive and healthcare markets, the CIO’s role is especially crucial for driving the business. He was also new to the industry and needed to build a learning curve quickly.

So he devoted his first few months at the firm to looking around, talking to people and taking the measure of the place. “I especially wanted to see what our customers had on their roadmap for the next 12-24 months,” he told me and everywhere he went he heard the same thing. They wanted access to real-time data.

As an experienced CIO, Libenson knew a cloud computing architecture could solve that problem, but concerns that would need to be addressed. First, many insiders had concerns that moving from batched processed credit reports to real-time access would undermine Experian’s business model.. There were concerns about cybersecurity. The move would also necessitate a shift to agile product management, which would be controversial.

As CIO, Libenson had a lot of clout and could have, as traditional change management models suggest, created a “sense of urgency” among his fellow senior executives and then gotten a commitment to the change he sought. After the decision had been made, they then would have been able to design a communication campaign to persuade 16,000 employees that the change was a good one. The evidence suggests that effort would have failed.

Instead, he flipped the model and began working with a small team that was already enthusiastic about the move. He created an “API Center of Excellence” to help willing project managers to learn agile development and launch cloud-enabled products. After about a year, the program had gained significant traction and after three years the transformation to the cloud was complete.

Becoming The Change That You Want To See

The practice of change management got its start because businesses needed to adapt. The shift that Burroughs made to electronics was no small thing. Investments needed to be made in equipment, technology, training, marketing and so on. That required a multi-year commitment. Its competitor, NCR, was unable or unwilling to change and paid a dear price for it.

Yet change today looks much more like Experian’s shift to the cloud than it does Burroughs’ move into electronics. It’s hard, if not impossible, to persuade a product manager to make a shift if she’s convinced it will kill her business model, just it’s hard to get a project manager to adopt agile methodologies if she feels she’s been successful with more traditional methods. .

Libenson succeeded at Experian not because he was more persuasive, but because he had a better plan. Instead of trying to convince everyone at once, he focused his efforts on empowering those that were already enthusiastic. As their efforts became successful, others joined them and the program gathered steam. Those that couldn’t keep up got left behind.

The truth is that today we can’t transform organizations unless we transform the people in them and that’s why change management has got to change. It is no longer enough to simply communicate decisions made at the top. Rather, we need to put people at the center and empower them to succeed.

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

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The Top 5 Change Leadership Models Every Leader Should Know

The Top 5 Change Leadership Models Every Leader Should Know

GUEST POST from Chateau G Pato

Change leadership is a vital aspect of any organization’s success. It involves guiding and influencing the strategic transformation within companies to ensure they remain competitive and relevant. Here, we explore the top five change leadership models that have proven effective in various organizational settings, accompanied by two case studies that illustrate these models in action.

1. Kotter’s 8-Step Change Model

Developed by Harvard Business School professor John Kotter, this model provides a comprehensive step-by-step approach to implementing successful change. It emphasizes the importance of creating a sense of urgency, forming a powerful coalition, and generating short-term wins to maintain momentum1.

2. Lewin’s Change Management Model

Kurt Lewin’s model is one of the founding frameworks of change management. It’s built on the concept that change involves three stages: Unfreezing, Changing, and Refreezing. This model is particularly useful for understanding the human aspect of change and the need for a structured approach1.

3. McKinsey’s 7-S Model

The McKinsey 7-S model focuses on seven internal elements of an organization that need to be aligned for successful change: Strategy, Structure, Systems, Shared Values, Skills, Style, and Staff. It’s a holistic approach that considers both hard and soft aspects of the organization1.

4. Braden Kelley’s Flow of Change Model v1.5

According to Braden Kelley, “achieving successful change is a complex undertaking, that we must make a more human process so that it is less overwhelming for those most affected by it and for change leaders and planners as well. Change Leaders can simplify change in certain ways, but they can’t make it simple.”

When you see his model in the best-selling book Charting Change (now in its Second Edition), you will notice that there are not three, but eleven different distinct stages to strike the proper balance between simplicity and complexity. Braden Kelley highlights in the model that the Disequilibrium stage is where many change efforts fail. According to Kelley, “The organization has begun ending the old way of doing things (and potentially even celebrated that ending) and has tried doing things the new way. This leads to a feeling of disequilibrium in most people as they determine whether the new way is better and decide whether they feel justified in continuing to resist the new way or whether to acclimate to doing things the new way.”

People who license the Change Planning Toolkit get access to the Flow of Change Model v1.5 Worksheet and the ability to track the Triple-T Metric (Time to Transform) over time for equivalent size change initiatives to see whether their change realization efficiency is accelerating or not across the eleven stages.

5. The Kubler-Ross Change Curve

Based on the stages of grief, this model applies the emotional journey to organizational change. It helps leaders understand employee resistance to change and the emotional transition needed to accept new ways of working.

Case Study 1: Adobe’s Transformation of HR Functions

Adobe’s shift from traditional software sales to a cloud-based subscription model required a significant change in their HR functions. They applied the 7-S framework to align their internal strategies and structures with their new business model, leading to a successful transformation.

Case Study 2: Barclays Bank’s Change in Business Practices

Barclays Bank underwent a major shift in its ways of doing business to adapt to the digital age. They utilized Lewin’s model to unfreeze old habits, introduce new digital banking practices, and refreeze the new processes into the company culture, resulting in improved customer satisfaction and operational efficiency.


Understanding and applying these change leadership models can significantly enhance a leader’s ability to steer their organization through the complexities of change. The case studies of Adobe and Barclays Bank serve as exemplary instances of how theoretical models can translate into practical success.

SPECIAL BONUS: Futurology is not fortune telling. Futurists use a scientific approach to create their deliverables, but a methodology and tools like those in FutureHacking™ can empower anyone to engage in futurology themselves.

Image credit: Pixabay

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