• Organisational behaviour

The new path to organisational change

The new path to organisational change

Has business entered a new era, one that means that the old paradigms governing change are no longer the road to success? Dan Cable shares his thinking.

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Daniel M. Cable, Professor of Organisational Behaviour at London Business School, studies organisational culture and its effects on sustained competitive advantage and leadership development. His research and book, Change to Strange: Create a Great Organisation by Building a Strange Workforce (Prentice-Hall, 2007), laid the groundwork for his belief that business has entered a new era, one that means that the old paradigms governing change are no longer the road to success. He shared his current thinking with Georgina Peters.

How do you view organisational change in 2012?

Today, the basis of change is small changes in human behaviour, rather than grand organisational changes. It is a matter of hundreds (or even thousands) of individuals acting in new ways; and, by this, people inside a firm bring about organisational change that customers can see and respond to.

This must be challenging.

Basically, it is a matter of making the employees’ individual patterns of behaviour build up to substantial organisational change. It’s critical that all those different ways of acting add up to one thing; and that is the difficult part because lots of little changes that don’t move in the same direction, that aren’t made coherent, end up in confusion. It takes leadership to make the changes have a beneficial effect.

Are you saying that today’s workforce is different, more self-motivated?

Yes. It is a workforce that is more sceptical and questioning than ever before. It is more sophisticated, more cynical, more educated — a more tuned-in and plugged-in workforce, in large part because so many people now are enlightened by the Internet and social media. These are workers who already know the old models of change, such as John Kotter’s eight-step model, often better than their leaders do. Today’s workforce has been through so many ‘change initiatives’ that change is a bad word. Today’s workforce is much more aware of the world around them, of the struggles that the world is facing, such as the sustainability of the planet. They also are aware of the value of self, their lives outside of work. They want to feel that the work they do makes a contribution and is not just a way to move their arms and legs for 10 hours a day in return for money. They also have greater awareness of their competition, of what other companies similar to theirs are doing; and they want their own company to succeed, both for personal reasons and as a point of pride.

New leadership

What does that mean for leaders?

That change in employee awareness demands a different kind of management. Typical industrial revolution-style management — the kind in which the leader is supposed to think up the good idea and then cascade it into the workplace — clearly isn’t going to cut it anymore. Change is needed quickly and often, and frequently ideas for change come from individuals working at all organisational levels. This only makes sense: the people doing the work must deal with the nitty-gritty of the business on a daily basis, and they know the way the firm actually operates. So change is, in a sense, more of a group activity, one that can come from the bottom up. This means it takes a different model of leadership to understand its value, and then encourage and direct it.

What steps must leaders take to make this new model of change happen?

Leaders must provide their employees with hope, purpose, and encouragement to try new things. They must prepare them to adhere to a new method or a new strategy even if, at first, it seems like the new direction will be a failure. For example, they can provide a sense of common purpose by rallying their workers with stories about how their collective efforts will create a better tomorrow. Such stories should provide hope, focusing on why the workers, as a collection of individuals, can do something to improve life for themselves, the organisation — even the planet.

How do leaders encourage workers to persevere if getting results takes time, which it usually does?

I think they must make certain that their workforce knows that making change will be a struggle, that it will take time and that it may not work perfectly from the start. There is a learning curve.  It is during this time of struggle that most people get frustrated and revert. To avoid that, like any coach, leaders have to encourage people to push on through the delays. It’s what coaching is all about.

Such organisational change is similar to what happens when someone has hopes of becoming more physically fit. It’s one thing for them to accept that as a goal. It’s another thing to motivate them to be at the gym before sunrise day after day and to do something that is physically unpleasant and isn’t part of their normal routine. At that point, you have to be able to remind them that this is something that they want and that you want for them. You encourage them by emphasising again and again that they should focus on the purpose, that the end result will make what they are going through worth it.

Do you think people in leadership positions actually understand that?

Not always. Purpose aimed at the long term is rare. Frankly, I don’t think most leaders have a purpose for their leadership, other than money for their own cost of living. For example, they may want change because it will improve profits and get them that yacht they want. But let’s be honest. The people who actually have to change, have to input data into the systems in new ways or do many other (perhaps difficult) new things, don’t usually get a yacht then, or ever. In reality, collective action has to be about more than the leader’s yacht: it has to be about a common sense of purpose. And if the leader can’t convince them of that, it’s unlikely that lots and lots of people are going to make a sustained common change.

Real change

You believe, then, that for real change to occur, leaders are critical to the process.

Yes. Leaders have to understand that innovation and creativity must take place in an organisation for it to remain competitive in the long term. And once they accept that, they have to give their employees the belief that change can take place and that new ways can help everyone to succeed. That is the only way to get hundreds, thousands (or even hundreds of thousands!) of people to sign up to try to alter lots of little things, to make lots of little changes every day.

You say this is the only way. Really?

Yes. It is the only way to build an organisation that is change-ready, adaptive and resilient. It’s a psychological approach, not a strategic one. Organisations work best when there are hundreds, or even thousands of people that are looking every day for ways to make a better tomorrow.  Change is not a pre-time affair after all.  Change just keeps coming because the world changes, and competition keeps challenging us.

Can you cite examples of companies that have managed to engineer change repeatedly and that have created change-friendly workforces?

The companies that immediately come to mind are GE and IBM, both of which have a long history of making changes that move them forward in time to take advantage of changes in the world around them. But there are many others, companies that have survived over time by making critical changes.

Another good example is IKEA, the privately held international home products company founded in 1943 in Sweden. Today, it is the world’s largest furniture retailer. Over time, it has made many changes in the way it operates. For example, after being rocked by scandals about its use of formaldehyde in the early 1980s, the company took a proactive stance on environmental issues. In 1990, it adopted ‘The Natural Step’ framework as the basis for its environmental plan. Today, IKEA is heavily focused on sustainability, something its employees take pride in and work to enhance.

And I’ll mention one more. SAS is the world’s largest privately held software company and a global leader in business intelligence software. The company, headquartered in Cary, North Carolina, was founded in 1976 and has experienced decades of continual revenue growth, which many attribute not only to the value of its products and the execution of its business but also to its knowledge of good business practices.  It has been estimated that SAS saves between $60 million and $80 million a year by not having to replace people. SAS is a good example of how leaders can appeal to workers’ desire for work/life balance and can, as a result, create a workforce that continually looks for ways to improve the company so it remains competitive.

What is the focus of your current research?

I am currently involved in a number of projects aimed at ways to improve workforce performance. One example is work being done with a health care organisation in the United States worried about nurse burnout and how changing jobs might increase long-term employment relationships. My associates and I came up with an approach that allowed each nurse to come up with a self-reflective job title that advertised what he or she was best at. One nurse who gave a lot of shots to children called herself ‘Sally Quickshot’ because she felt she was really good at distracting the kids and giving the shot so quickly they didn’t have time to get scared. That title allowed her to bring more of her own personal identity to work, which she said relieved much of her stress. Across the board, this approach led to statistically-significant less burnout. As I’ve noted, real change in organisations happens one person at a time.

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  • AUTHORS

Georgina Peters is a Switzerland-based business author.

Daniel Cable is Professor of Organisational Behaviour; Subject Area Chair at London Business School. Formerly, Professor of Management at Kenan-Flagler Business School. He teaches on the Accelerated Development Programme at London Business School.

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