Organizational Transformation:
A Map for Success
Dr. Miles Overholt and Steven Steckler
Transformation: Emotion, Logic, Chaos?
When facing any major change in our lives, we decide to move forward if we believe that the rewards are worth the risk. We think long and hard about decisions that are painful or difficult especially if there is only a 50% probability of success. If the perceived chance of failure is close to the chance of success—even if the change will give us a better outcome—we will retreat and maintain the status quo.
Yet, highly intelligent, and experienced executives often decide to implement a major organizational change, whether a new strategy, structure, or an acquisition, even if its success is dubious. Often executives do not have a choice. They must change or die so they defy the odds established by both John Kotter, who early on stated that the failure-to-success odds are 70%/30%—and McKinsey & Co. who agreed.1 Our experience confirms that long-term sustainable success is difficult to achieve2. What further decreases the likelihood of a positive outcome is misunderstanding what is necessary to prepare the organization for significant change.
A Pressure Tested Model
As consultants, we have helped many organizations with major transformation initiatives. We have had successes. But to be honest, we also acknowledge that we have had “failures” or at best, partial successes. We readily admit the failures are painful for the consultants and for the organization as a whole and many of its employees.
Several years ago, Steckler (along with Cianni and Huldin3) presented an experiential model for managing change. Audience members complained that too many models are too complicated and verge on “unimplementable.” Our model, on the other hand, is simple, intuitive, and rational.
The guiding principles of this “non-model” are:
- Top leaders make the difference.
- Change management is not linear.
- Engaging employees is critical.
- Change happens one person at a time.
- The emotional aspects are the hard part; the rational aspects are easy.
- Language can help or hurt.
- You can’t force the speed of change.
- Without a common purpose, there is no “common” change.
- Even the change team needs change management.
Everyone in the audience agreed with the presenters, shared similar experiences, and concluded that the 70% failure rate is due to a failure to follow one or more of these guiding principles. While these principles are readily identified and easily stated, everyone agreed the hard part was identifying behaviors linked to each principle.
Thinking About Change: First Order vs. Second Order Change
The complexity of transformational change is overwhelming. At any given moment, thousands of dynamics are occurring at all levels. How can anyone, any team, know how to connect, empathize, listen, and flex to the entire organizational ebb and flow? Organizational change is not a job for one leader or one superb change management team.
Nor is it simply about the first order of change dynamics (changing structures, processes, behaviors). It also requires second order change—altering the deep-rooted patterns that drive behavior. It is the second order change that drives new insights, triggers different emotions, and builds the foundation of a new paradigm. Second order change requires time and patience, something rarely accounted for in acquisitions, mergers, or transformations. In other words, what is needed is to help employees not just to behave differently, but to think differently—to adopt a new perspective. This applies equally to executives.
All of which points to the elephant in the room, the unmentionable power dynamic between hierarchical levels. Second order change requires new insights that change the existing model. Second order change shifts the power from what worked before to what will work in the future. For example, some organizations have leveraged the power of IT to share more critical information horizontally and vertically, increasing employees’ scope and latitude. Others have tightened control of the workflow and decreased scope and latitude. Either approach shifts the power dynamics. Consequently, transformation can quickly turn into a power struggle.
The Power of The Past
While executives, leaders and managers can rely on position-based or hierarchical power, employees (and frequently leaders and managers that are not “all in”) don’t have this power. The power they do have that can impact and prevent transformation, is passive-aggressive power. For those who don’t want the change to happen, they have the power to refuse it or even undermine it. In many failed transformations, particularly in already dysfunctional organizations, passive-aggressive4 power is the braking system. It can slow, disrupt, or stop the change effort dead in its tracks.
“Organizations can have collective trauma and pain.”
On an individual level, passive-aggressive power is often fueled by painful and/or traumatic memories of past events. The memory of these negative experiences act as alarms for individuals, warning them that similar experiences could hurt them in the present.
Organizations can have collective trauma and pain. As transformation consultants, we know that the first item in any discussion about a proposed transformation tends be the sins of all the previous leadership teams regarding prior change initiatives (“We’ve been here before. It was a fiasco.”). But it’s more than just the previous leaders employees are thinking about. They are often convinced that the current executives’ behaviors will lead to similar “failures.”
This must be processed. It is the pain of past failures, broken promises, and sacrificed employees. There is a litany of past pain, hurt and trauma: failed mergers or acquisitions; failed transformations; layoffs that stripped the organization of needed talent; turnover of key leaders, experts, great supervisors, and good workers. Everyone can cite a failed critical initiative, a painfully delayed software implementation, or a lack of training for new systems. Add to this list, misguided strategies, consultants who did more harm than good, promised rewards that were never delivered, or unsafe facilities, undoable jobs, and uninformed work practices.
These collective hurts and traumas, often institutionalized and shared with newer employees, are the undercurrents that drive many of the second order patterns. They are currents that drive dysfunction and visceral opposition of change. They destroy trust, dampen hope, and are any new leadership team’s inheritance. These traumas are very resistant to any type of organizational power.
“Tackling passive aggressive power directly is usually counter productive.”
Tackling passive-aggressive power directly is usually counter-productive as it just strengthens the collective perception of impending future harm. The antidote for passive-aggressive power is to defuse it in one of three ways. First, acknowledge the hurts and sins of the past. This will drain some of the negative energy driving the passive-aggressive behavior. Second, acknowledge that employees have the power to not change. Just acknowledging this is often refreshing and empowering for employees. Third, design ways for everyone who wishes to become a stakeholder in the change to help avoid the past mistakes. The most effective way to defuse passive-aggressive dynamics is involving employees, in a meaningful way, in designing the change.
Creating Second Order Change
Expecting a few of these guiding principles to work despite the risks we outlined, is probably reasonable for singularly focused, stable, well-run smaller companies. These types of organizations may get lucky and hit the 30% success jackpot. Expecting most of these principles to work as intended within more complex companies probably borders on magical thinking. To believe that all of these recommendations can be applied flawlessly in each and every organization, in a well-orchestrated effort, borders madness.
To increase overall chances for application success, addressing the deep-rooted patterns that drive behavior —or second order change—we have provided what we believe to be “implementable” examples within the Nine Guiding Principles framework. Here are our overarching suggestions to create the necessary positive climate:
- Identify, address and “process” the elephant in the room (SECOND ORDER CHANGE) (deep rooted patterns with their accompanying feelings that drive behavior).
- Discuss the emotional aspect of change around specifics, like a new work process. Link the work process—any and all details—back to the strategy to provide a why. Then discuss peoples’ emotional reactions to the change in the context of the strategy. For example: “What is still unclear about this?”, “What don’t you like about this and why?” and “What do you like about this and why?” (FIRST AND SECOND ORDER CHANGE)
- Wherever possible, no matter the hierarchical level or power position driving it, involve people lower in the organization upfront in the design. This is not just gathering a team to run the changes by, but a group of assembled and impacted individuals that can react, respond and suggest. Ask this team to identify what is necessary both for successful implementation and to sustain this change. Move from the high level conceptual to the detailed mechanics and get them involved and engaged in being part of, first the review team and then the implementation team. (FIRST AND SECOND ORDER CHANGE)
Change First and Second Order Issues as a Step Toward Higher Probability of Success
Here are our recommendations to address both first and second order change issues in each of the nine guiding principles.
1. Top leaders make a difference
Recommended Changes
The odds are that your beloved CEO is not exceptionally gifted at listening to people who have pain about past failures of other executive teams.
To address this, appoint a C-Suite leader who has strong people skills to be the face of the change.
Continuously work at strengthening the relationship between the designated change leader and the CEO—they must be in sync. Ensure that the C-Suite leader is the face and the symbol of the change.
Top leaders are the foundation to successful change.
Top leaders are the foundation to successful change. Change management requires many different leadership skills, from the visionaries to the planners to the skilled operators. In today’s world, change management also requires an empathic people connector. One who can understand the emotional side of the change, empathize with both the pain and the joy of changing. This role is equally important to success as the other roles.
To what extent are your leaders comfortable in soliciting and responding to emotions? Even exceptional leaders are not typically skilled in helping others manage emotions. But forging a common purpose is difficult. It upsets the status quo and raises emotional issues which threaten beliefs about how the organization should operate. A senior executive who is a good listener and a connector can help ease the discomfort, smoothing the way for the change. Strong leaders with a good ear have shone throughout the Covid epidemic.
First Order Change: Structures, Processes and Behaviors
The odds are that your beloved CEO is not exceptionally gifted at listening to people who have pain about past failures of other executive teams.
Second Order Change: Changing Deep Rooted Emotional Patterns
Internal admission that the CEO is not a deity who can do all things needed to lead the transformation to the promised land.
Power Dynamic
Begin a shift to more collaboration throughout the levels of the organization.
2. Change management is not linear
Recommended Changes
First, project how the change will impact each organizational level, team, function, and location.
Second, assess the level of change acceptance demonstrated by these different populations.
Then intervene based on this information. Work on different issues based on what is necessary. When acceptance is achieved, move on.
Managing change often forces us to move a few steps back and restart previous actions.
We demand and create solutions within our organizations that have distinct phases. Almost by definition, this implies you must successfully complete one phase before attempting the next one. Create a timeline, a roadmap, a project management plan. The problem is that managing change is a little messier. It requires non-linear thinking and addressing not avoiding the tumultuous world of emotions.
In fact, managing change often forces us to move a few steps back and restart previous actions in order to respond to people’s reactions and emotions. This is the opposite of the linear thinking executives and leaders use to run daily operations. Emotions cannot be project managed on a tight and predictable schedule.
First Order Change: Structures, Processes and Behaviors
Develop a map of your organization and plot how the change will unfold, including the type of change needed, progress toward that change, and employees’ feelings and reactions to the change. The map is a dynamic tool. It will help you monitor the progress of the change throughout the organization.
Use the map to pinpoint what is or is not working, and where the change is accepted and where it is not. Allocate resources based on this.
Second Order Change: Changing Deep Rooted Emotional Patterns
Enable employees to co-design the change with the change team and senior management.
Find software that enables you to engage employees in redesigning the organization. However, be clear what the employee role and latitude is.
Power Dynamic
This dynamic map enables the change team to respond to specific areas with customized interventions. This humanizes the process which is a fundamental power shift.
If you engage the employees in redesign, you have acknowledged them as partners.
3. Engaging employees is critical
Recommended Changes
Meaningful change is done with the employees not to the employees. The more involvement and the more the power dynamic is shifted, the more likely the change will endure.
Without employee engagement, the change will never take place.
Employee engagement rates in steady, normal operations are often as low as 20% to 30%. How much more difficult is it to motivate employees to support and embrace significa nt organizational change? But without this engagement, the change will never take place. Without understanding the “why” employees will drag their heels or even sabotage change efforts. And management can’t afford to lose that brain power if they really want to transform the organization.
First Order Change: Structures, Processes and Behaviors
Employees should be viewed as “active” stakeholders of the change, identifying what will and will not be helpful. Ask them to review and provide input on key aspects of the change.
Second Order Change: Changing Deep Rooted Emotional Patterns
Ask employees to help identify the current deep-rooted patterns. Collaborate to develop ways to change the pattern.
Power Dynamic
Shift from “being told” to change to collaborating in the change.
4. Change happens one person at a time
Recommended Changes
It does happen one person at a time, but some people jump on board faster while others hang back. Work across organizational boundaries to address and engage like-minded employees who have similar issues. Engage them in tasks to deal with the issues.
Another approach can be a super engagement invitation to those who are still resisting.
The individual needs to shift from their current state to the future state.
In any change process, the individual has to shift from their current state to the future state. But that requires letting go of the status quo and being open and prepared to move on. Yes, there are many models, from Kurt Lewin to William Bridges, but in each the movement of the individual is key. If change happens “one person at a time” then the change process would best be individualized. Although this might be ideal, in reality it’s not feasible. What we can do is shape the message for different groups of people. We can customize tactics and language to fit different disciplines, personalities, or locations. We can also realize that change happens on an individual schedule. Although we can’t wait for every employee to be fully engaged and committed, we can recognize that processing speeds are varied.
First Order Change: Structures, Processes and Behaviors
Instead of driving change down the hierarchical levels, approach change as if employees were a market and a set of customers.
Individualize your change management approach by acknowledging employees’ differences in feelings and reactions.
Second Order Change: Changing Deep Rooted Emotional Patterns
Many employees have a deep-rooted belief that they are disposable cogs in the system.
People feel more power in groups. In this context, acknowledging that they have similar issues about the change becomes empowering.
Empowerment begins to shift the deep-rooted pattern of being a cog.
Power Dynamic
Engaged employees feel acknowledged and more powerful.
5. The emotional aspects are the hard part; the rational aspects are easy
Recommended Changes
Be aware that each and every individual, based on personality, prior experience with change and the impact of this next change, will react differently. Everyone is different from both an intensity level and the time they need to process. Allow for these differences in your approach and realize that pushing ahead just to maintain your roll-out schedule will not, in the end, yield success.
Until recently, emotions in the workplace were forbidden.
Many approaches to managing change are overly rational, emphasizing how organization structures, reporting relationships, or work processes will be different. Including the reason why it’s being done is essential but not sufficient. Within a corporate setting, managing emotions openly and effectively is often uncomfortable. In fact, until recently, emotions in the workplace were forbidden. It was unheard of for executives to address employee emotions or to express emotions (except enthusiasm). But for successful change to occur, individuals must be allowed to negotiate the emotional changes arising during transition. To facilitate this specific activities and time must be factored into the overall change approach.
First Order Change: Structures, Processes and Behaviors
Before driving the change effort forward, take the time to fix the employees’ biggest concerns. This process surfaces the traumatic events and all the related feelings from the past. It signals to everyone that you are focused on their needs as well as the collective needs of the organization.
Conduct forums to address the feelings and help employees move on from past traumas. Doing this shows that you acknowledge what happened before and respect people’s feelings about it.
Second Order Change: Changing Deep Rooted Emotional Patterns
Understanding the history with its successes and failures is the quintessential connecting experience. Humans understand joy and pain; they connect with each other through sharing both.
While this process can be cathartic and helpful, be attentive to when it’s time to move forward.
Power Dynamic
Shift the power dynamic from talking down to employees to talking with employees.
Sets the stage for collaboration; defuses passive-aggressive anger/power and frustration.
6. Language can help, hurt, or hide
Recommended Changes
Speak in the language of the employees who will be impacted. Use terminology that matches their work environment and culture
Companies are a Tower of Babel.
Understanding and connecting with each other is critical in engaging as many people as possible in the transformation process. Language is often a barrier. Being truthful and finding the right language is almost impossible when most companies are a Tower of Babel. Every function has its own jargon, different levels speak different languages and different locations encompass employees with different localities, sub-cultures, and norms.
In addition, employees in different hierarchical levels often miscommunicate because of their very different perspectives. The language of employees often is feeling based, the language of supervisors is careful, and the language of executives is business logic. Simple announcements and messaging fails to consider all the different perspectives, and contributes to disconnection.
Change announcements and communications contain words. Words can indicate transparency, truth, and respect. Words can also demonstrate the opposite.
First Order Change: Structures, Processes and Behaviors
Discuss the change with employees, listening for their language and reference points.
Frame the overall change and encourage them to describe in their terms. Use this terminology going forward.
Repeat this process in each function and level of the organization.
Find common terms and identify when and where to use which terminology.
Commit to transparency and demonstrate respect via words that are truthful.
Second Order Change: Changing Deep Rooted Emotional Patterns
Understand and discuss why employees work in the organization. What their lives are outside the organization and what the organization gives them. Then discuss what they give to the organization. Talking in their language increases connection.
This is the two-sided Employee/Organization Value Proposition. Assess the exchange rate.
The exchange rate is what the employees gain versus what they lose in working in the organization. If employees work for pay and tolerate the environment and their job, the exchange rate is negative. Perhaps acceptable but always grating on the individual.
Power Dynamic
By connecting to the employees’ perspective and acknowledging their world, true collaboration begins.
7. You can’t force the speed of change
Recommended Changes
No, you cannot. But you can fan the flames of the change enthusiasm. You can support the sprouting of change and the change itself by knowing where in the organization it’s taking place, why it’s growing in a particular location and then applying that knowledge in other locations.
The speed of change is what it is.
The speed of change is what it is. It cannot be forced. Leaders are no different from the rest of us. The usual conversation is do you pull off the bandage slowly or quickly? Interesting that when it comes to managing change, we talk about bandages. To understand how fast you can go starts with learning from our own experiences, especially the failures. Given a bit of learning agility and adequate reflection, this kind of learning has always been most powerful.
Experiential learning is essential. Debriefing and understanding our failures is a key to learning. Not just for executives, but for all. Change leaders need to include failure debriefings as a critical part of the process. The experience of failing, understanding the failure, and integrating the learning takes time and is emotionally draining. It is neither an easy nor a speedy task.
First Order Change: Structures, Processes and Behaviors
Using a non-linear change map enables you to customize interventions and support.
You are no longer driving the relentless engine of change but rather discovering where the change energy is and spreading it to others.
Second Order Change: Changing Deep Rooted Emotional Patterns
Breaking the typical sequence of driving change along a process or within hierarchical levels, challenges employees’ deeply held (negative) beliefs that hierarchy and process is most important and little else matters.
Hopefully your change plan addresses what you want to change at a deep-rooted level. The emotional side of change.
Power Dynamic
Shift from fighting the reluctance to change to flowing with the change, at whatever pace it is going.
Shift from battling and forcing, to acknowledging employees and collaborating.
8. Without a common purpose, there is no “common” change
Recommended Changes
Start with the employee and include losses as well as gains. Pause and allow for reflection. Don’t lead with the benefits to the business, customers, and employees. The path begins with emotions. Then discover what the change will provide for everyone. A common purpose or benefit linked to the change must be very broad and about more than just the market driven reasons that the analysts care about.
Change must be driven by a common purpose.
Change, whether driven by business reinvention, an acquisition, a move to more “digital” or even a routine initiative, must be driven by a common purpose . The problem is that building a common purpose takes time. By definition, it cannot be dictated from the top because a common purpose needs to include everyone simultaneously. Consultants and change management leaders can try to rally the employees around the idea of a new improved organization, a more efficient and effective way to work, or just pure organizational survival, but these efforts will rarely produce real, lasting change.
Cascading change slowly through organizational levels no longer works. By the time the change reaches the lower levels, the top becomes frustrated with how long it is taking and rushes these lower levels.
Approach change as the marketing experts approach markets. Find the commonalities that link people together beyond their function, department, and role. Target those groups with messages focused on their issues and concerns. Keep the messaging consistent with the overall organization’s theme and customize the change effort with details related to their jobs and their perspectives.
First Order Change: Structures, Processes and Behaviors
Uncovering a common purpose can be a wonderfully connecting experience for all: robust discussion and sharing leads to greater clarity. Everyone’s view is expanded and validated. The common purpose becomes more than management’s desire for the change. It becomes a process that will benefit all in both common and specific ways.
Second Order Change: Changing Deep Rooted Emotional Patterns
Changing the rules of transformation engagement breaks a very deep-rooted pattern of top-down imposition of will.
If you build upon this approach, you will have colleagues, not stranded employees.
Power Dynamic
Shift from “what they want us to do” to “what we want to do.”
9. Even the change team needs change management
Recommended Changes
The change management team must understand that organizational change is not an initiative or a project. It is a non-linear emotional roller coaster that thrills and disappoints, moves forward a step or two and back a step or more.
The team needs to learn how to manage a non-linear process, cope with their own emotional overload and learn to listen. Above all they need support in processing their own feelings and being patient with the change.
The team must identify when course corrections are needed and then make them on a continuous basis. This includes challenging and coaching the leadership team.
The team responsible for managing change also needs attention and support.
The team responsible for managing change also needs attention and support. Those responsible for managing these initiatives are often selected based on their success in managing more linear, ongoing business requirements and objectives, not for their ability or prior experience in managing change. We assign good project managers to change initiatives because they are needed not because of expertise. We need these managers, but they may not be the best qualified to lead or manage a change initiative.
Does each member of the team possess the non-linear mindset and understand the importance of the rational and the emotional side of change? Are members sufficiently resilient to respond to the potential negative employee reactions to change? Since, similar to the executive team, the change management team has known about the impending change for months, they may have already processed their own emotions. If the change team has taken the rare step of encouraging managers and employees to express their feelings and concerns, that can become an overwhelming emotional overload at the very time that they have adjusted.
First Order Change: Structures, Processes and Behaviors
To support the change team, leadership must provide at the very beginning of the transformation initiative a clear charter for the team that spells out responsibilities, levels of decision making, boundaries and authority. This charter must be communicated to the entire organization.
The change team needs to abide by these guidelines:
- Do not drive change faster than the pace of the employees. You can’t force change.
- How you achieve change at each point sets the stage for the next change effort. The way you get there is critical. This is the subtext for the common purpose. It’s important to circle back to the common core regularly and use it as a criterion in decision-making.
- The change team must address critical issues as they arise. Not in a prescribed time but when the issues arise. Again, this is not linear!
- The team should also be empowered to resolve unsafe or unethical issues immediately.
Second Order Change: Changing Deep Rooted Emotional Patterns
Addressing employees with respect, acknowledging some areas will change faster and in different ways than other areas, breaks the deep-rooted pattern of linear operations. It is more reality-based than following the proverbial check list. It is allowing the “patient” to manage their own healing rather that the doctor prescribing.
Power Dynamic
Engaging employees in the pace of the change and in collaboration with the change management team creates a sense of oneness and “we are all in this together.” This will go a long way towards reducing the passive-aggressive power game.
Conclusion
Change and transformation efforts can be incredibly difficult and demanding. However, failure to successfully implement needed changes can be devastating—organization suicide. What is needed is not to avoid transformation, but to approach it in a different way. To recognize any changes in an organization will affect all members of the organization. Therefore, transformation success is predicated upon involving, from the start, all members. Of equal importance is to recognize first order change is not enough to sustain any desired transformation—second order change must occur. To obtain second order change requires a shift in perspective and accompanying patterns, which is best accomplished by identifying, acknowledging and responding to emotions, rather than ignoring (or forbidding) them. We believe our model, as presented here, can be successfully implemented, and will result in drastically altering the current failure-to-success odds.
References
1. Robinson, Harry. (July 2019). McKinsey.
2. Hughes, Mark. (2011). Not everyone agrees with the 70% failure rate. Journal of Change Management (Volume 11, Issue 4).
3. Mary Cianni, Liz Huldin, Steve Steckler. (October 2015). Leaders, Strategy, Culture, Change and Transformative Growth: Lessons from the World of M&A. Strategic HR Forum.
4. Passive aggressive power is the indirect resistance to demands unwanted by the individual