Adopting Analytics Culture: 4. Why is the change management track record so poor? (4 of 7)

PART 4 OF 7 IN A SERIES ON ADOPTING ANALYTICS CULTURE

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4.  Why is the change management track record so poor?

Why are the results of change management initiatives so unpredictable and the outcomes so uncertain?  Earlier in this series, it was proposed that adopting analytics culture inherently requires organizational change, particularly to decision making processes and supporting incentives.  However, evidence suggests worse-than-even odds for success in change management initiatives. In terms of analytics-focused change, the implication is that it is difficult to orchestrate a shift in decision rights, roles, processes, and motivations. In this piece, we focus on the actual mechanics of a change management effort, particularly the role of hidden biases and agency interests which often lead to less-than-optimal outcomes.

downsizing

In the previous article we suggested that a core challenge: many change initiatives fetishize the organizational chart – formal reporting relationships and top-down management structures.  In a Harvard Business Review article entitled ‘The decision driven organization’, it is proposed that change initiatives need to transcend organizational charts.  The article proposes that the focus should be on decision effectiveness via goal-oriented incentives, assessment schemes, access to information, and decision rights. The implication is that the crux of change rests upon being able to shape the structural networks which compose the organization.  In particular, there is a need to affect motivations in terms of social networks and incentives: the imbedded psychological contracts employees have with their organizations.

‘Organizational culture’, the set of attitudes, informal relationships, networks of respect and ‘followership’ (to adopt a term from Barbara Kellerman), determine whether change will be embraced and adopted or resisted, actively or passively.  Passive resistance is the most difficult to detect – it involves ‘disengaged behavior’ and covert blocking that cannot easily be measured or tracked.  However, there is some cause to consider that disengaged behavior stems from a perception on the part of the employee of a lack of organizational justice – a perception that the organization has broken a perceived contract and therefore does not deserve full engagement.

Change leaders largely attempt to motivate change by creating a sense of urgency and by ‘storming’ the culture by putting a coalition of change leaders in the spotlight.  Typically, ‘downsizing’ key dissenters is used to to instill a sense of urgency.  When formal efforts at intercession regarding cultural change fail, change initiatives can quickly devolve into witch hunts where passive resistors and lurking naysayers are routed out and demoted, discredited, or simply walked-out of the organization. This culminates in a codified ritual common to reorganizations, now very familiar to the modern corporate workers: a surprise Friday all-hands meeting leads to a set of sub-meetings in which resistors are called into a scripted ‘career development’ meeting administered by HR specialists.

Packages are offered and career counseling is provided as an ‘invitation to take the next step in one’s career’ (a step which will occur somewhere else, not in the organization). Cardboard boxes are provided from a stack and workers, some dejected, some in tears, collect snow globes and family photos from their desks under the watchful eye of rented security personnel.  IT passwords are revoked, badges are handed in, and targeted resistors and those with nothing to offer the new organization are walked out into the parking lot to begin their now jobless ‘next career adventure’.

I have seen many of these change programs conducted in large organizations and chances are you have as well if you have been involved in corporate work in the past two decades, especially in the U.S.  For those who have experienced a change program, there are givens: 1) it will proceed loosely in a linear, clockwork fashion, as described above (according to the basic Kotter process), 2) despite the structured approach, it is inevitably a tumultuous affair, draining in terms of aggregate organizational productivity and resources, and 3) there will be those who gain, those who lose, and those who must leave.

In the base assessment, people’s jobs are at stake, meaning emotions and drama run high throughout the change process. All that is certain is that some will lose, some will win, and keeping one’s head down is no guarantee that one will emerge from the process unscathed. A range of emotions and behaviors emerge, some contemptible, some heroic.  Viewpoints are expressed and long-led animosities may emerge in dramatic form. When the ‘guiding coalition’ is formed, ambitious middle managers often see an opportunity to increase their power and standing in the organization: posturing and opportunistic behavior emerges. With key stakeholders in the organization knowing radical organizational change is pending, many see opportunities to settle long-held scores and to dispatch enemies or to promote private cliques and cabals.

If we take history as a rough guide, revolutions are tumultuous and destructive affairs.  After an initial heady period of enthusiasm, the revolution classically descends into an entrenched conflict of special interests and vested coalitions.  Often the ‘landed class’ (or vested professional middle class) coalesce into intransigent power interests.  This can be similarly seen in corporate reorganizations:  coalitions of senior managers band together into interest groups and ‘sue for peace’, albeit with the interests of the smaller coalition seeking patronage concessions.  This can have the effect of new middle-management groups initiating a ‘power grab’.

External consultants, often key ‘framers’ and orchestrators of the change process, are guided by a singular metric: client satisfaction.  Thus, consultants, especially to the degree that they lack deep knowledge of the organization’s history and context, are often bound to and guided by the biases and prejudices of senior managers and the subsequent guiding coalition.  There is thus a danger of dispensing the proverbial organizational ‘baby with the bathwater’ to the degree that such efforts ultimately defer to the unquestioned whims of those who fund the reorganization effort.  Little constraints or ‘second guesses’ are put upon those funding the effort.

While none of this is in-of-itself ‘wrong’ (it is what it is and it is, how things are typically done and run), the reality is that the process of ‘unfreezing’, changing, and ‘re-freezing’ does not guarantee that the outcomes from reframing will achieve value creating or even organizationally efficient ends (i.e. core process improvements, evidenced cost reduction, increases in speed, increased customer satisfaction, or improved sales figures). As the Bain research attests, chances are roughly 70% that the initiative will fail outright. All that is certain is that there will be a new organizational structure and that not everyone initially involved will be along for the ride.

Emerging talent will likely have a chance to ascend in the organization via the aforementioned ‘guiding coalition’ (or by brokering/negotiating new roles via the coalition), but the collateral damage can be severe: talented and long-serving employees with embedded knowledge may be inadvertently walked-out, or may walk-out, exasperated by the seeming baseness and often arbitrary process. For employees that are more introverted, there is a risk of being mis-labeled as a resistor or ‘deadweight’.  Some have even charged that there is a predisposition to dispense with older workers with higher salaries and perceived lower energy levels,

In short, great uncertainty afflicts most change initiatives, leading to often arbitrary changes guided by little more that the biases and interests of senior management and the guiding coalition.  Such events are ripe venues for poor decisions to be made, decisions suffused with agency interests (self-serving managerial interests) and/or well-documented cognitive biases (i.e. Dunning-Kruger effect, bandwagon, confirmation, attention, availability, overconfidence, framing, grounding).

For organizations seeking to implement a change program to adopt ‘analytics culture’, to improve ‘analytics maturity’, the risks are even higher: evidence-based management programs propose to tinker with the very gears and cogs of organizational power – access to key information, decision making rights (power), and control over resources (the power to force compliance depending on the framing of analytics).

This then appears to be a sloppy state of affairs, especially when so much organizational value is at risk.  However, as has been suggested in the previous article, there is hope for improved, more ‘surgical methods’.  Analytical methods themselves can be used to conduct such operations with greater rigor.

In particular, it is proposed that social network analysis (SNA) can be used to gain insight into decision and power dynamics in the organization. By ‘mapping’ the networks which compose the organization, targeted diagnostics can reveal where hidden fractures and weaknesses can be addressed. SNA can reveal where there are broken functional processes, decision making chains, and information sharing.  It is to this topic we will turn in the following article.

REFERENCES

Blenko, M. W., Mankins, M. C., & Rogers, P. (June 2010). The decision-driven organization. Harvard Business Review, June 2010, p 54 – 62. Last retrieved May 5th, 2013 from http://hbr.org/2010/06/the-decision-driven-organization

Kotter, J. P., & Cohen, D. S. (2002). The Heart of Change. Boston, MA, USA: Harvard Business School Press.

Kotter, J. (January 2007). Leading change: why transformation efforts fail. Harvard Business Review. January 2007. Last retrieved June 2^nd, 2013 from http://hbr.org/2007/01/leading-change-why-transformation-efforts-fail/ar/

Kotter, J., & Schlesinger, L. (2008). Choosing strategies for change. Harvard Business Review. July – August 2008.

Merchant, K. A., & Stede, W. A. V. d. (2003). Management Control Systems: Performance Measurement, Evaluation and Incentives. London: Prentice Hall.

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