The recent story on the BBC website about 24 suicides by employees of France Telecom over the past year or so is a dramatic reminder of the human dimension of organisations and the challenges of change. While disturbing, it isn’t that there are suicides at all, because the statistical analysis suggests this is within range for an organisation with an employee population of 100,00. It is rather that it highlights the difficulties people face in adapting to these changes and while the majority don’t suicide, how many are affected in ways that extend far beyond the boundaries of their job into family and society more generally. Likewise, it calls the change process into question and the nature and extent of the changes themselves.
That change is a normal feature of business is a given. It is in the nature of capitalism to evolve through innovation and change affecting both public and private sectors. There is also little doubt that the global business environment is increasingly turbulent from the effects of globalisation, industrialisation, convergence and the near death experience of the “GFC”. All of these provide plenty of opportunities for managers to apply their knowledge and skill in effecting change, however, it is an oft-cited “fact” that 70% of change initiatives can be considered failures and if the research, statistics and anecdotes are anything to go by, there is a real problem with the process and effectiveness of organisational change efforts. While there are any number of books, articles and services to assist and guide the process, yet this number persists in the research and literature. Is this the natural order of things or are we simply handling what should be a normal business activity in an abnormally bad way? Is there any way that we can deal more effectively with these challenges and improve the overall quality of the change process outcomes? Is it the price of Schumpeter’s creative destruction and are these “losses” simply collateral damage?
I suspect the starting point for the problems we experience is that we seem to believe that change is an exception rather than the norm and this is reinforced by the modern mantra “…. don’t waste a good crisis”. Change becomes a project rather than a process and one that has to be endured rather than engaged. There is a sense in which we want predictability and believe that if we just get through this period we can return to that stability. Likewise, managers are often more skilled in managing the status quo than in being able to manage the process of change. In the current context, the real human, organisational and operational costs are generally hidden and seldom, if ever, exposed to any form of accounting. The outcomes of a change initiative that are reported usually appear in purely financial terms but if the balanced scorecard has taught us nothing else, it is that truly successful business performance is evidenced across the other domains of customer relationships, internal processes and learning and development.
The simple truth is that these other performance dimensions are generally glossed over in favour of a number that implies that all is well with the change.
Often, a change initiative will take the form of a restructure that is an urgent and reactive response to changed circumstances. Something has come as a surprise and the only thing to do is downsize and reorganise. Later, who asks the questions “How did we allow ourselves to get so big?” or “How many people do we really need to do the work we have to do?”. “Why were we surprised?” Over time, behaviour might return somewhere close to the way it was and as time moderates the memory of the near death experience a new status quo is established: until the next time. The reality is that this approach to change is unsustainable and there is often a new set of victims (since people are in effect a renewable resource) who live in the blind hope that it won’t happen to them.
Peter Drucker’s wonderfully practical and common sense approach to management is essential here. What often gives rise to the situations in which this reactive change occurs is a change in “The theory of the business” as he put it in his 1994 article in the Harvard Business Review. Having observed many situations in which change was necessary, he observes that an organisation that stumbles often looks to a miracle worker to help them get out of the situation in which they find themselves. Drucker points out that:
To establish, maintain, and restore a theory, however, does not require a Genghis Khan or a Leonardo Da Vinci in the executive suite. It is not genius; it is hard work. It is not being clever; it is being conscientious. It is what CEOs are paid for.
I want to use the next couple of posts to revisit “The theory of the business” and discuss how we might manage the process and challenge of change more effectively.