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14 July 2009 • 7:00 am

Irrational Side of Change Management – Part 1 of 3

An article in the McKinsey Quarterly hit my radar from several different directions in the last few days. Entitled The Irrational Side of Change Management, the title itself was more than enough to arouse my curiosity, especially since I’d recently written a┬ápost of my own about irrationality. Unfortunately, as you may know, McKinsey restricts access to some of its best content to its premium subscribers. Fortunately, I was able to obtain a copy of this well-written article, and had quality time over the weekend to read it a couple of times.

The summary and my comments presented here (in three posts this week) are no substitute for reading the article itself, and it is likely that with some effort you can find a copy to view within your own organization or network of colleagues. My aim is to both entice you to read the article and to engender discussion here.

Despite the plethora of books and articles on the topic of Change Management since the 1996 publication of John Kotter’s Leading Change, McKinsey’s Carolyn Aiken and Scott Keller contend that the field of change management hasn’t been very successful. Kotter’s earlier research revealed that only 30% of change programs succeed; McKinsey’s 2008 survey of over 3,000 executives worldwide found that only about one change program in three is successful.

McKinsey’s Emily Lawson and Colin Price offered a framework for influencing attitudes and behavior in their 2003 article The Psychology of Change Management. They said that four common sense conditions are necessary before employees will change their behavior: a compelling story about why the change is necessary, leaders and colleagues modeling the role of change, reinforcing mechanisms to align processes and incentives with the change, and capability building of the skills needed for the change. Common sense, indeed – but the problem is that people aren’t always rational. Aiken and Keller┬árevisited these four conditions to organize their nine new lessons why common sense doesn’t always work.

Condition I: A Compelling Story

Established thinking in change management says that ongoing communication of a compelling reason is a necessary ingredient for change.

Lesson 1: What motivates leaders doesn’t motivate employees

McKinsey idea: Leaders tell stories about change that are company-centric: ‘We can regain our leadership through change, determination, and hard work’ or ‘We’re falling short of our competition, and our survival depends on change.’ But employees have been shown in research to be motivated roughly equally by five factors: social impact, customer impact, company impact, team impact, and self-impact. So the typical change story misses 80% of what workers care about.

Tenacious Tortoise comment: Absolutely! As leaders progress in their careers and rise in their organizations, their own motivations become much more aligned with the company than when they were younger. Leaders think they understand how their employees think, but the fact that they’ve become leaders makes them think differently than rank and file employees. Focus groups in which new strategy messages are tested with employees easily reveal this gap in thinking.

Lesson 2: Let employees write their own story

McK: In a behavioral study, participants given a lottery ticket with a randomly assigned number in willing to sell back those tickets for far less than those who were given the opportunity to select their own number. When people are able to make their own choices, they are far more committed to the outcome.

TT: The success of the balanced scorecard programs I’ve led had a lot to do with the extent to which the cascade process enabled mid-level managers and front-line managers to understand high-level strategy and then express the story (as captured in the cascaded strategy map) in their own words. Facilitators need to strike a careful balance between mandating every word of strategy in the cascade and allowing sub-units of the enterprise complete freedom to go their own way.

Lesson 3: The story needs to be about both avoiding threat and seizing opportunity

McK: While the ‘deficit-based’ approach (identify and then fix a problem) is the predominant change model taught and used, a ‘constructionist’ approach (discovering, dreaming, and designing solutions around new ideas) has arisen as a reaction to the blame and resistance that results from a purely deficit-based model. Excess emphasis on either model in the change story is risky.

TT: Not a very compelling lesson from McKinsey. It is easy to say that emphasizing either extreme is a bad idea, but they offer no guidance on finding the optimal point between the two extremes. It’s a fine line between beating up people for poor past performance and losing credibility with unconvincing ‘blue sky’ aspirations for greatness.

Next: More lessons from McKinsey.

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