We started writing this article before the COVID-19 pandemic radically transformed the working world, as well as our personal lives; however, the trends we were writing about are not only still current, but now more relevant than ever. The last few months have shown how quickly things can change and how - just to remain afloat, let alone profitable - businesses must be able to transform radically and rapidly to meet changing circumstances.
So, what’s changed?
Organisations have been undertaking change initiatives for many years, but more recently, the transformation trend has moved away from fixed multi-year programmes with predetermined end goals, towards a constant and continual need to change. It’s no longer enough to enhance existing products and services to maintain customer loyalty.
Instead, organisations are having to repeatedly reinvent themselves and their products to align with market trends and to adapt their product and services to keep up with technological developments. This, coupled with the increasing demand from consumers and customers for the new and exciting, means that organisations today must respond and adapt at a rate faster than ever before to stay in business.
Digitisation and technology developments such as artificial intelligence (AI), cloud computing and the internet of things (IoT) have shifted technology from an enabler to also being a disrupter. Smart devices are fast becoming ubiquitous; remote control of central heating or monitoring pets at home is just the first wave for home users.
For organisations, maintaining consumer trust in obtaining and managing data is essential, requiring them to have confidence in their own staff to be the digital agents. The commoditisation of IT brings technology that used to be solely the preserve of large organisations within the reach of small businesses and ordinary citizens. The rise of cloud computing and service-oriented architectures makes it easier and quicker to deploy new services than ever before. But only if you keep up.
Organisations which still measure change programmes in years and quarters are being overtaken by small start-ups who release marketable products in days. Just look at the banking industry for examples of challengers like Monzo and Starling to an established market that once seemed impenetrable to competition.
In this article, Lyn Girvan and Will Izzard discuss why organisations need to undertake constant change to stay in the game and highlight some key elements which enable organisations to successfully respond to a rapidly changing environment.
1. Adapting to survive: from agile delivery to business agility
Increasingly, organisations need to respond to change at pace to survive in competitive markets. This requires organisations to be adaptive, not just in terms of how they build and deliver their technology, but in how they develop their people and culture.
For many, adopting agile approaches and frameworks at scale is the answer. However, implementing agile practices does not necessarily make an adaptive organisation. Addressing the adoption of a lean / agile mindset is a key challenge as it is at the core of organisational culture, traversing organisational hierarchies from administrative clerk to CIO.
Adaptive organisations understand their business capabilities and services and respond rapidly to customer demand and changing markets. Successful adaptive organisations employ rapid prototyping to prove or disprove hypotheses, not just for technology but across value streams and services. Learning from failure as well as success is key to being an adaptive organisation.
Key challenges facing organisations who want to achieve this include:
- Developing leaders who effectively empower and support their teams.
- Changing organisational structures so they encourage cross-functional working and knowledge-sharing.
- Providing access to the right information to support rapid and effective decision-making and prioritisation.
- Embedding a culture which encourages learning and continuous improvement, e.g. innovation, autonomy, creative problem-solving and physiological safety for constructive challenge.
Creating a culture which encourages learning and continuous improvement, flexible new ways of working, cross-functional working, knowledge-sharing and collaboration is critical to success. Leaders will need to articulate a clear vision of the future, decentralising decision-making and empowering their teams to deliver. They are likely to need support and coaching to do so.
2. Using coaching and partnering
The scale and pace of change takes its toll on the people involved. Our biological origins react badly to it; the brain is mostly on the lookout for things that will harm us and change is perceived as ‘difference = uncertainty = stress’. This makes supporting people a critical activity. One way to do this is through coaching and partnering - two approaches that can make a huge difference.
These practices are not new but are growing in importance and popularity; however, they are also often missing within organisations. This view is supported by the Change Management Institute, which has identified a coaching and partnering skills gap and the need for ‘…Change Managers trained in coaching models who can demonstrate a sound partnering approach to support sponsors and leaders of change.’
Coaching is largely about working with someone to help them find their own answers and solutions. Why? Because the best answers come from within. We can contrast this with teaching (primarily an ‘expert imparting knowledge’ feel) and mentoring (which still carries the element of the expert along with a guidance capacity). At a basic level, a coach seeks to form a relationship of trust so begins with asking and listening, not giving solutions - the magic is in the questions. One of the most important functions of a change practitioner is to coach seniors in leading change.
Partnering is often thought of as a formal arrangement; partnerships signed to say ‘we are in this together’ often mean sharing risk/gain. But to continue from coaching along a collaboration path, partnering is usefully viewed as both a set of formal procedures and a state of mind. Just because it says we shall partner with each other in a contract doesn’t mean it will happen. What we seek in a partnering relationship is a sense of mutual trust and ‘…a recognition that the relationship itself is as important as the contract’ (1)
This requires interpersonal skills which go beyond the contractual parameters of sharing risk. These may include encouraging dialogue, practising empathy, checking blame, policing cynicism, building trust and maximising serendipity. The essence is that if we want to move away from traditional, confrontational customer-supplier relationships to something which complements these fast-paced changing environments, adopting human and collaborative practices are key to creating the conditions for genuine partnering.
3. Developing resilience
As organisations try to adapt to this constant change, they are realising that their people need to adapt too. Adopting coaching practices (above) is a way of helping and supporting people impacted by change, but what else can we do? A growing trend in organisations is to invest in developing a growth mindset and focusing on behavioural science…
Growth mindset is based on the work of Dr Carol Dweck, author of Mindset[PS1]. This describes two types of outlook that people can hold: either a growth or a fixed mindset, which shapes our behaviour, our happiness, our growth, our relationships and our beliefs. Originating in education, it is popular in businesses too - so much so that titans like Microsoft and HP have embarked on company-wide initiatives to cultivate a corporate growth mindset culture.
The basis is that people with a fixed mindset believe intelligence is fixed and talent is inherent; they avoid difficulties and see setbacks as disasters. Those with a growth mindset seek new challenges and continuous development, see difficulties as helping us grow and do not let setbacks derail them.
In practice, it is subtler than that sounds. But imagine a workforce that seeks out challenge and is inspired by feedback, instead of one asking for permission and nervous about making mistakes. Any one person can decide to strive for growth mindset traits, but the power of this way of thinking when adopted corporately could yield huge gains in productivity, ideas, motivation and morale. Creating such a culture is not easy, which is why organisations like Microsoft approach this with a focus on how people (and their brains) operate, ultimately seeking to make growth mindset a good habit.
This brings us on to behavioural science - another field increasing in popularity. Habits are automatic routines that we like to perform. The brain is a big fan because they are low energy: shortcuts and minimal effort are trademark happy places for our grey matter. This kind of preference is a feature of behavioural science. It’s a term that probably means different things to different people but a good definition is ‘the application of insights from economics, psychology and neuroscience to understand, predict and influence the decisions we make’.
There is a lot of support for the rigour that science provides in explaining human behaviour - it appeals to the rational (if sometimes latent) scientist in us all. This is surprising really because one of the revelations of behavioural science is that we are far from rational beings; emotion underpins everything we do and our ‘rational’ decision-making apparatus is affected by over 175 cognitive biases(2).The key word in the definition above is application. The goal for practitioners is to turn the findings of neuro and behavioural science into utility; being able to use these amazing insights in the changes we design and manage is a potentially huge gift.
4. Why understanding your customers is key to transformation
Finally, for organisations to maintain their customer base, they need to continually reinvent themselves. This requires them to shift their focus from products to a customer-centric approach. With increasing competition and ranges of services on offer, it is more important than ever to align with your customers’ values, not just seek to meet their needs. In a crowded and competitive marketplace, product features or price no longer provide sufficient differentiation between vendors. Instead, customers choose their suppliers based on how well they perceive the organisation to understand them, their needs, problems and values.
The ability to identify and connect with the customer requires a service thinking approach: an ability to look beyond the products to see the customers from the customer’s perspective - to truly empathise with their values and enrich their journey, not only in consumption of the product, but in the experience of obtaining it. This understanding, that value is only realised at the point of utility and not at the point of supply, is what makes organisations stand out. They understand not just what the customer needs in a product, but why they need it and tend to adopt a ‘how can we help?’ ethos.
