Leaders Focus Too Much on Changing Policies, and Not Enough on Changing Minds

Recently I was part of a European startup´s summit. The host asked 50 CEOs attending a conference how many of them were currently involved in a significant business transformation. Nearly all of them raised their hands, which was no surprise. According to a study by BCG, 85% of companies have undertaken a transformation during the past decade. The same research found that nearly 75% of those transformations fail to improve business performance, either short-term or long-term.

The age of globalization has changed the way business is done. Everything is much faster, everyone can have access to any information about the market and the business environment is constantly moving and changing. In order for companies to survive in that kind of environment, they need to be ready to change and adapt to the ever-changing market conditions, which doesn’t just require the ability to create a better product or find new ways of production.

The change is on everyone's lips. Often the different concepts start with the corporate structures, with the process: also with the locations, and of course with the technologies.

Whenever the firm wants to make some changes, they tend to do a SWOT analysis (strengths, weaknesses, opportunities, and threats) in order to find what are the most suitable areas which could be changed and improved and then decide between them and start making the transformation strategy.

There are multiple causes, that’s for sure.

1. Not thinking about the long-term effects

When firms want to make some changes, they usually do that because the company’s current performance is probably not so good.

But, since humans are usually not known for their patience, then the long-term strategies suffer. The firms are mostly focused on improving their performance and in return, they usually expect almost immediate results.

But we know that is not always the case. Sometimes you need to think wider and have a bigger picture in your mind. That is exactly the problem with some of the changes made in firms.

Managers often just want to fix the problem as fast as possible because they want to see fast results. And adding to that, their salary also depends on how well the firm performance is, so that is one of the reasons they are mostly focusing on the short run.

2. Not changing how employees work

Whenever you get a new, more modern TV or any other device, you need to learn how it works, what are the new options, what is different from your old device.

It is the same in business. Whenever you, as a firm, change policies or some operational or organizational systems and tasks, the same principle applies. People need to learn about the new system, adapt, and just then try to meet the company’s expectations.

The problem occurs because firms do not create such environments, where people can think about what they do, where they can try to be innovative, thus improving the system. Most companies do not encourage their employees to do that, some even try to restrain innovative thinking, despite knowing that it is one of the most important ways for a firm to develop and rise.

3. All for one and one for all

We mentioned that firms often tend to pursue changes in multiple areas in order to minimize the risk of failure, which is completely fine. But the problem can occur when they are looking at each area separately.

What is the main goal of these changes? No matter if you just make changes in one area or 6 areas, all of these changes have the same goal to achieve. And that is to improve the company’s overall performance.

Then why would you, as a manager, look at just one or 2 aspects of the firm separately and decide for each of them separately? What is meant to be done is to look at the firm as a complete puzzle and its areas as puzzle pieces. The puzzle cannot be completed if even one of the pieces is wrong.

The firm cannot just do an analysis of one sector it wants to change and make a prediction just for that sector and how it would influence the company’s performance. I mean, theoretically, it could, but then it wouldn’t be a very thoughtful company.

Instead, the firm should analyze sectors in which it wants to make some changes, then do analysis on how those changes would affect not just the company as a whole, but the other sectors as well, and only then it should decide if the changes in certain sectors would be efficient and effective.

"What most organizations typically overlook is the internal shift - what people think and feel - which has to occur in order to bring the strategy to life. This is where resistance tends to arise - cognitively in the form of fixed beliefs, deeply held assumptions, and blind spots; and emotionally, in the form of the fear and insecurity that change engenders. All of this rolls up into our mindset, which reflects how we see the world, what we believe and how that makes us feel. " 

WHAT ARE THE CRUCIAL THINGS TO FOCUS ON?

We just saw why there is a high percentage of the companies who tried to change something but didn’t succeed. But there is still 1/4 of them who were successful.

Let us find what they did right and what their main focus while making those changes was.

The firms we are about to talk about didn’t just focus on changes that could benefit them in the short run. They focused on changes that would create a long-term functioning business.

According to the research done about these companies, we can segregate the six most important things they focused on when they conducted their changes.

1. Give your employees a purpose

When managers want to make changes, they should try to tell other employees what is the nature of those changes, why it is so important to make them and how employees, who are bones and skeleton of a company can help in that process.

That way, employees would know they are a part of something important and good, so they would be more reluctant to help in any way they can.

By telling employees how they can contribute to the very important cause, managers can share the load of the entire process, which should make it much easier, because when the employees are satisfied and prepared to help their firm, they are more reluctant to accept any changes which could benefit the entire firm.

2. Change is a marathon, not a sprint

As the title says: “Change is a marathon, not a sprint”. That means that results cannot come overnight, nor can the process of conducting changes be done in a short time.

That said, a firm needs to know when it’s a good time to slow down a bit and when it’s a good time to push things forward.

It is really important not to overload the employees too much, because they still have their work schedule and if they, apart from that, had more additional work, eventually their ability to help with the changing process would be lessened.

3. Adapt and learn new abilities

Whenever there are changes in any company, it often requires an adaptation and sometimes knowledge of a new set of abilities, because some of the regular processes could be changed or refined.

The firm has a task to create an environment in which their employees can adapt to that new system and learn new abilities, needed for the effective functioning of the entire firm.

4. Create a flexible composition

In order for the people to adapt to changes and learn new skills, the firm should create an environment where people have some level of autonomy, so they could learn their own ways which could make it easier for them to adapt and acquire new skills.

The firm can do that by reorganizing its structure so it is more lenient towards its employees.

In that kind of environment, employees would be able to try to solve problems on their own, learn more about their jobs and even learn more about other people’s jobs, which could be very useful if they needed to move to do another work in the firm.

5. Encourage employees to learn

In the more lenient environment mentioned in the previous part, employees tend to be more encouraged to think on their own and solving their own problems and by doing that, they can learn a lot of new and useful things.

A good company should always encourage its employees to seek more knowledge.

Yes, there is always a risk that an employee will leave the firm, but the potential benefits outweigh that risk because that employee can contribute much more to the firm, thus improving its performance.

Firms can do that by organizing special training for a specific individual or a group of people, where they could acquire more knowledge and some new skills.

6. The built-in team responsible for the change 

When firms make changes, they tend to change the management team at the same time.

Now, the argument about new people being able to look at the problem from a different perspective is valid, but there are a lot of things a new management team from the outside wouldn’t know.

That’s why it is a good thing to build a team inside the company which would serve as a managing body when it comes to the process of making changes.

People from that body would already know what are the strengths and weaknesses the company has and what opportunities it can grab to improve its performance.

CONCLUSION

In order to change a company, the people who work in this company must also change first and foremost. This is the linchpin of every change process. The good thing is that people want to grow and change. Often, however, one sticks to old structures because they give us security and satisfy our fears. At perART, we deal constructively with fears and thus create a permanent willingness to change. In a protected space you have the opportunity to get to know new perspectives through art and to try out new positions. You discover new aspects of yourself and your colleagues.

You now know why the change is so important part of every firm. You also know that every change comes with a risk and its own dangers.

Success is never guaranteed and the consequences can be lethal to the company. You have seen that a lot of companies who conduct this process of making changes don’t succeed in their efforts, but it is not like that because change is bad.

The problems occur when companies do not conduct those changes as they are supposed to, following the important guidelines and including those six important factors we mentioned earlier.

But, without the change, the firm wouldn’t be able to survive in today’s ever-changing business environment. Therefore, what distinguishes the firms that survive and the ones that don’t is the ability to adapt, evolve, and successfully make changes when it is necessary.

References: HBR, Cleverism