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ORGANIZATIONAL CHANGE MANAGEMENT

Organizational change management can make or break an organization regardless of size.

According to McKinsey & Company 70% of all change initiatives fail because we’re creatures of habit and biologically hardwired to stick with what’s worked for us in the past. It’s not helpful when battling change going into the future, like a pandemic, shifting markets, supply chain challenges and a kitchen sink of other problems.

How do you keep things from going down the drain?

My next guest, organizational change management expert Erika Andersen says we need to embrace the very things we’re wired to avoid and she’ll also explain how.

What You’ll Discover About Organizational Change Management:

* Why organizational change management is hard for most people 

* 3 Assumptions that initially wire us to resist change 

* Why management resists change 

* Why leaders need to model change for it to succeed 

* 4 Things necessary to help employees through organizational change 

* Best way to provide management support for organizational change 

* How organizational change management happens on 3 levels 

* The magical thinking that stymies organization change management 

* And MUCH more.

Guest:  Erika Andersen

Erika Andersen is the founding partner of Proteus International, a coaching, consulting, and training firm that focuses on leader readiness.

For over three decades, she’s served as a consultant and advisor to top executives at today’s leading organizations, including Amazon, Spotify, Charter/Spectrum, and the Yale School of Public Health.

She’s the author of four bestselling books, including Growing Great Employees and Be Bad First; is a popular leadership blogger at Forbes.com; and is the host of The Proteus Leader Show, a business and leadership podcast globally ranked in the top 10%. Her newest book is Change from the Inside Out: Making You, Your Team, and Your Organization Change-Capable (Berrett-Koehler Publishers; October 26, 2021).

Related Resources:

If you liked this interview, you might also enjoy our other Leadership and Management episodes.

Contact Erika and connect with her on LinkedIn, Facebook, and Twitter. 

Erika has four bestselling books, including Growing Great Employees and Be Bad First. Her newest book is Change from the Inside Out: Making You, Your Team, and Your Organization Change-Capable

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How to Successfully Grab Organizational Change Management by the Horns

Organizational change management can make or break an organization regardless of size. Seventy percent of all change initiatives fail, according to McKinsey & Company because we’re creatures of habit and biologically hardwired to stick with what’s worked for us in the past. That’s not too helpful when battling change going into the future, like a pandemic, shifting markets, chain supply challenges, and a kitchen sink of other problems. How do we keep our business from going down the drain?

Well, my next guest, organizational change management expert Erika Andersen, says we need to embrace the very things we’re wired to avoid, and when we come back, we’ll find out how.

This is Business Confidential Now with Hanna Hasl-Kelchner, helping you see business issues hiding in plain view that matter to your bottom line.

Welcome to Business Confidential Now. I’m your host, Hanna Hasl-Kelchner, and today’s guest, Erika Andersen, she’s the founding partner of Proteus International, a coaching, consulting and training firm that focuses on leader readiness. For over three decades, she served as a consultant advisor to top executives in today’s leading organizations, including Amazon, Spotify, Charter Spectrum, and the Yale School of Public Health.

Erika is also the author of four bestselling books, the most recent one being Change from the Inside Out: Making You, Your Team, and Your Organization Change-Capable, which is perfect because organizational change management is the topic du jour. So let’s have her join us now. Welcome to Business Confidential Now, Erika.

Oh, thank you so much. I’m thrilled to be here. I’m sure we’re going to have a great conversation.

Well, we’re going to have some fun. I mean, I know it’s a serious topic, but I think there’s just so much that we can learn from you. I mean, why are we such klutzes at organizational change management? Is it because we’re desperate to get back to normal? I mean, why do we underestimate how difficult change can be?

I think it’s because we somehow think that we should all magically like change and want to change. So, when I was researching this book, Change from the Inside Out, when I write books, I always want to crack some code, some important answers I want to find to help people, and the two codes I wanted to crack when I was writing this book – because we’ve had to change practice for almost a decade and I had been helping organizations large and small through change.

But there were two questions I really wanted to answer. The first one is the one you just said, why is change so hard for most human beings? The second one was how do individual people actually go through change? What happens when we do make a change? Because I felt if I understood that and could explain it simply, both of those things would be dramatically helpful for people.

So, the first one, why is change so hard? I’m a huge student of history and I looked back at history and as I thought about what has happened in our past over the past thousands of years, I started to think a lot about this word homeostasis, which most people know this word and it means the urge to return to stable conditions is basically what it means.

When it was coined about 100 years ago, it was first applied to physiology, and we all know this. When we’re too cold, we want to put on some more clothes. When we’re too hot, we want to take them off or get into the air conditioning. When we’re hungry, we want to eat. So there’s this strong and consistent urge to come back to those stable conditions that seem optimal to survival. But what then it started to be applied to is the fact that people also have a strong homeostatic urge when it comes to economics and sociology and political groupings.

And as I thought about this, I realized that until pretty recently, most people’s lives did not change very much. I mean, when you think about even 100 years ago, most people grew up in the same place their parents had grown up, most people went to – if they went to school, they went to the same school that their parents and their siblings went to. If I’m a pipe fitter, my son is going to be a bit fitter.

Life was pretty stable and change was a threat. If you think about human beings 200, 300, 500, 1000 years ago, most of the time when a change happened, it was dangerous and a threat. It was a famine, and we want to get back to eating regularly. Or it was a war, and we want to get back to peace and a certain level of prosperity.

So, I started to think, wow, we’re wired over most of human history to consider change a threat and a danger, and this homeostatic urge to come back to what has worked before, until very recently, that mostly served us. But now over this last few decades especially, change has become a daily thing that we all have to deal with changes on so many levels – personally, professionally, organizationally.

And so that longstanding historical urge to always come back to what’s worked before, to come back to the known, that just doesn’t serve us as well as it used to. In a way, we need to rewire ourselves to see change as generally neutral and potentially positive, which is not how most of us go into it most of the time. Does that make sense?

Yes, it does make sense. It’s kind of scary too. So how do we rewire on a daily basis?

Oh, I love that you went right there. Okay, so then the second thing I said that I wanted to figure out was, well, what actually happens when we do change? When we overcome this historical wiring, what’s that process? In thinking about this and doing research, we came to, I came to what we’ve come to call the change arc because an arc is you go uphill, it gets harder, and then on the other side of the hill, it gets easier.

So, the first thing in the change arc is it turns out that when a change comes at us – and this is true even for people who say they like change. What they mean is they like changes that they themselves are hard in seeing, but when a change comes at us, the first thing is, almost without exception, we want to know some things, and those things are very predictable and pretty simple. We want to know what the change means for us. What does this mean for me? Why is it happening, and what will it look like when it’s done?

Those are just age-old things we want to know. What does it mean for me? Why is it happening? What will the future look like post-change? And as we’re starting to ask for and taking that information, because of this – I was so excited when I figured this out. Because of this really age-old homeostatic urge…

…our mindset, even as we’re beginning to ask these questions, is that we almost always assume that a change is going to be difficult and costly and weird. Difficult means I don’t know how to do this and other people are going to get in the way of me doing it. It’s difficult, it’s hard. Costly means it will take from me things I value. So, we assume that a change is not only just time and money but more intrinsic things like identity and power and relationships and reputation.

We assume that changing in the way that is coming at us is going to take some of these things away. Then weird just means strange and unnatural; this is not “the way we do things around here.” So, imagine that’s our beginning mindset when a change comes at us, which is self-protective, arising out of our history. Then what I noticed is that people who get – what I’ve come to call change-capable, who get good at changing, they figure out how to change their mindset from this is going to be difficult, costly, and weird to…

…this could be easy or at least doable, rewarding, and normal. As soon as I realized that, then I saw that people who made that mindset shift, then they were willing and able to do the new behaviors that the change required and the change could actually occur and be adopted. Then I went all the way back to that statistic that you referenced that I use in the book as well from McKinsey that when they say that 70% of organizational changes don’t get the results that are targeted to achieve.

They say that the main reasons that that doesn’t happen is lack of management support and lack of employee buy-in, which to me is they’re not going through that change arc. They’re sticking with this is going to be difficult, costly, and weird, and I’m not going to do it.

So if you can, yourself as a leader, become better at moving yourself through that mindset shift and then help other people to move through that mindset shift to think about how this could be easier or at least doable, rewarding, and normal, then that is the key to overcoming this terrible statistic, this awful reality that change in organizations most often doesn’t work very well.

Well, that’s fascinating, this whole idea of…

That is so true.

Yes. I mean, lack of management support. I mean, if they’re going to benefit from it, why doesn’t management buy in better?

Because they don’t see it. That’s a great question, Hanna. They don’t imagine if – so much of our lives happen inside our heads, right? So if I’m a manager and somebody is telling me, “Okay, we are going to use this great new process to invoice our client,” and my first thing because I have thousands of years of training that homeostasis is best…

…I think, “Oh my gosh, that is going to be so hard. I don’t know how to do it. My people don’t know how to do it, and we’re going to look like idiots in front of our clients. It’s going to cost us our reputation and it just feels strange.” So that’s their initial mindset, right? If they’re not helped to move through that and to start thinking about how it could be made easy, how it could become doable, how it could…

…to your point, benefits, how could it benefit you more than it costs you, and normal is a really interesting thing. Normal in this context means people that I think of as being like me do this, and people I admire and want to emulate do it. That’s why it’s so critical that leaders, especially good leaders, model changes and become advocates for changes…

…first, because people are looking to them to see is this normal. And so often leaders say, “We’re going to make this change,” but their people look at them and they’re not doing the new behaviors. People immediately go, “Okay, then it’s weird. It’s not normal. I’m not going to do it.”

Yes, the old double standard. Do as I say, not as I do.

Exactly. Precisely. When we talk about change, to leaders we always say – it’s that advice on airplanes – put on your own mask before attempting to help others. You have to get your own mindset right about the change and really think about how am I going to do this and how am I going to make it rewarding, how will it be rewarding to me, how can I make it normative? And if you don’t go through that work first as a leader, it is almost certain that your people will not adopt the change either.

And that’s really what is behind this 70% failure rate of initiatives?

That’s what their data shows, lack of management support and therefore employee buy-in. So, we have a really great five-step change model that kind of the second two-thirds of the book is about that, and having talked about homeostasis and this change arc first, I love our model and it works really well because it integrates the nuts-and-bolts side of change with this human side of change.

So, you definitely have to do the nuts-and-bolts stuff. You have to get very clear about what the change is going to be, and then you have to create a clear, feasible, well-communicated plan for making the change. At the same time, it’s critical that you understand that it’s equally important to cascade this change arc through everybody who’s going to be affected by the change.

Because even if you do all the nuts-and-bolts stuff right, if you don’t attend to that human need to shift people’s mindset about the change, then you get that McKinsey statistic. It’s not going to work.

It would also seem to be that sometimes the employees know certain things that could make the change successful or not successful and the way it’s presented, they know it’s not going to work. So, they have to participate in it. They can’t just be bystanders and saying, “Okay, here, now you go do this,” because they’ll be the first to say, “Hey, you didn’t consider XYZ.” So, they’ve got to be brought into the discussion.

Yes, absolutely. That’s a great insight. You’re completely right. And when we talk about creating a change plan, which is the nuts-and-bolts part of it, and also creating a transition plan which is helping people through it, and we use what we call change levers. You know how pulleys and levers are force multipliers? So, we’ve developed these four levers to help people, just as you say, move through it.

The first one is give information just really helping people to increase understanding. So the first level is increase understanding. Make sure that people know – don’t just do those happy face messages, really let them know what is this, why is it happening, what’s it going to look like, what does it mean for you, how are we going to support you, all that kind of stuff that they want to know. So, I’m just astonished sometimes, the lack of information, the lack of understanding that’s shared with people. So that’s the first thing.

Then the second thing is to clarify and reinforce priorities because a lot of times when there’s a change, people just assume that everything’s out the window, that none of our priorities are going to stay the same and everything is changing, “Oh my gosh,” you know? But generally, what’s true is that even when there’s a big change, people’s priorities stay pretty much the same. There may be one shift because we’re doing something differently…

…but if you can let people know that, that of your four big priorities, three of them are staying exactly the same and one of them is going to change a little bit because we’re doing X differently, that is hugely clarifying and reassuring and soothing to people, because then they don’t just feel like, “Oh my gosh, everything – nothing’s real anymore.”

So that’s good. Then the third one is, and this is what you were talking about, is give control. So, insofar as possible, when you can give people control on a change by, into your point, taking in their input, making sure you understand what they understand, that they’re given a voice, that they’re given as many choices as they can, that you listen to their input, all those kinds of things, that makes it much easier because one of the reasons we don’t like change is because it makes us feel out of control, we feel victimized by it.

So if you can give people more control, more choices, that really helps, and it gives you, to your point, good information. Then the fourth one is give support. In the early stages of a change, most of that support is listening because people, when they – people, that it’s disquieting to go through a change and they feel like it’s going to be difficult, costly, and weird, and they say that to you.

And way too often, leaders try to talk them out of their legitimate concerns or just reassure them or kind of pat them on the head metaphorically, and to really listen and take in people’s unhappiness or disquiet, really listen, really understand it and then when you’ve really heard them, then go to, “Okay, here’s how we can help.”

 “Here’s what we’re going to offer. Here are the tools. Here are the resources. Let’s figure out how to make it easier, more rewarding, more normal,” and that really deep interaction between leaders and people we found just helps people so much to go through that arc and to be willing then to behave in the new ways that the change requires.

I could see how that last piece is incredibly powerful because there’s always going to be some piece that nobody could anticipate, some little speed bump that needs a little help to get over. It’s like moving into a new house. You think you got it all figured out, but once you start living there, it’s like, “Hmm, we need to do something with this. Yes, we need a towel holder over here. This is not practical. This would be more helpful.”

It’s those little nitty things that make life easier when they’re solved, but they can just really be thorns in your side when they’re not because they’re huge inconveniences and then that’s all you focus on.

Yes, absolutely. That’s such a good insight, Hanna, and we’ve kind of built that in the fifth step of our model is called keep the change going. Even when you’ve made the change, it’s iterative, and a wonderful thing happens if you are really looking to see what’s working, what’s not working, and you get input from your folks that, as you say, we need some towel holders, this one thing is not working very well.

I give a fairly long example in the book of that, of a company making a change to their production process for their core product, and they find when they’ve made the change that part of the change was to automate the process, part of the process, and it’s not working as well as they thought and they gather feedback from their folks and they realize that the kind of knitting together the automated and human part of the process, they didn’t think about that.

So when the automation part of the process ends, because the automation is faster than the human part, it’s kind of spitting out the product faster than they anticipated, and so they hadn’t thought through that. So, in in the book and the example, they think through that with the people on the line and they decide they need two people at the point where it comes off of the automation line, and so they make a little sub change in the same way for that. And you’re exactly right.

The beauty of involving people is then they start to take ownership and they start to feel like this is our change and we want to make it happen well, which is exactly what you need because then it does happen well. It gets adopted

Right, because it becomes part of their success as opposed to having it be shoved down their throats which nobody likes.

That’s exactly right. Yes, that’s exactly right. No, you’re precisely right. The more that it can be like, “We need you guys to help us figure out how to do this properly,” guys in the Midwestern sense of men and women both, “We need you to help us figure out how to do this properly,” then people start going, “Oh, okay. This isn’t just being shoved down my throat. I can see the benefits, I can see how to make it easy, I can see how this is becoming normal.”

Right, if it helps them do their job better. I think the other really powerful thing from an employee engagement perspective is it demonstrates in a very tangible way that what they bring to the party matters. They matter.

Yes, yes. Exactly, exactly. All the way through the book, if you or your listeners have a chance to read it, we talk about change on three levels: kind of leaders, individuals and the organization itself. As I go through the book and talk about each step of our model, I talk about, okay, what are the responsibilities of the leaders in this step? And then what…

…are both the responsibilities of individuals and how you can bring individuals into the party so that they do start to see it as something that’s important for them for their success? Even when we talk about how – when you’re talking about why the changes happen, is happening, too often in organizations, the why, if there’s a why given at all, it’s a why that isn’t very relevant to the people in the organization.

The example I give of that is, okay, so if you’re going to make a change and that’s going to make the company more profitable, that may not be relevant at all to someone who’s going to make $15.00 or $17.00 or $20.00 an hour independent of how profitable the company is. So you need to focus on the whys that are relevant to them. Will it, to your point, make their job easier?

Will it serve the customer better, which is important to a lot of employees? Will it give them more capability to do kind of higher order tasks that they haven’t had the chance to do before because they’ve been doing this? You really have to think about the why that is going to be relevant to people if you want it to be motivating to them.

Right, from their perspective. I think that’s a hard shift for some senior leaders to make sometimes because they’re so far removed up the food chain, they can’t relate.

Oh, I think that’s exactly right. So, when we talk about creating this transition plan, we always say bring people in if you want to know – so let’s just say that a group that’s going to be deeply affected by a particular change are the salespeople. Okay, well, bring in a group of salespeople and ask them what’s going to be hard for them about this because to your point, if you’re the CEO and his or her direct reports, you probably don’t have a clue as to what’s going to be hard or easy about this change for these folks.

Right, what’s their day-to-day life look like on the road.

Yes, exactly.

Exactly. Erika, this is terrific but I think there’s still some folks – we’re looking at that Mackenzie 70% failure rate, so even though this is perfectly logical and it makes sense and everybody could come out with a win-win, what do you think is the biggest blind spot for leaders to say, “Yes, this Erika, she’s got something going on here and I think this is something we ought to do but” – what’s the but?

I love that question, and I think it’s that leaders, many leaders, perhaps even most leaders, they really still think – and it is magical thinking. If they looked at the data, they would know that this was not true. But they still think that if they just pay attention to the nuts-and-bolts parts of change and do it really well, “We have a good plan, we’ve done our due diligence, we’ve done the financial modeling,” that it should all work.

So, I would encourage leaders to think about the changes that have happened in their organization, whether or not they have been successful – and if the McKinsey statistic is correct, most of them haven’t been successful to the extent that they wanted them to be – and think about whether and to what extent they have in those changes focused on the kinds of human elements that we’re talking about: helping people really understand the change, have a chance to get their heads around it, think through how they can make it easier for them.

I would submit to you that most leaders, if they’re honest with themselves, they would have to say, “We didn’t focus very much on that.” Like, I’ve had leaders literally say to me, when I’ve talked to them about it, “Well, are you focusing on the people side?” had them literally say to me, “Oh, my people are great, they’ll get with it. They’ll get with the program.”

Or that’s HR’s responsibility.

We’ll see how that works out for you.

Oh, that’s marvelous, marvelous. Thank you, Erika. I really appreciate your thoughts on change management and the research that you put into your book and the process that you’ve created. I love these levers and pulleys. I think that’s really great.

And if you’re listening and are looking for tips and strategies for how to make your organization more change capable and successfully grab the organizational change management by the horn, be sure to check out Erika’s book, Change from the Inside Out, because it really does start with leadership and remember, leaders get stuff done not with their spreadsheets but working through people so the people side really can’t be discounted or you do it at your detriment.

So, her contact information is going to be found in the show notes at BusinessConfidentialRadio.com along with a link to her book, and if you know someone who is wrestling with organizational change in their company, in their business, or it could be a nonprofit, it doesn’t have to be a for-profit organization, tell them about Erika Andersen’s work and this podcast episode.

Share the link, leave a positive review so others can find out about these amazing tips and be better at organizational change management too. You could do that on your podcast app or at Lovethepodcast.com/BusinessConfidential. This is Business Confidential Now with Hanna Hasl-Kelchner. Thank you for listening. Have a great day and an even better tomorrow.

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