Forbes.com

Change Is Changing

Companies are coping with the death of traditional change management.

By David Michels

First published on abril 29, 2019
min read


This article originally appeared on Forbes.com. Traditional change management as we know it is obsolete. Even the very notion that change can be managed feels absurd given the reality and pace of business today. The intent of business executives—to deliver results more sustainably and more quickly—remains the same, but the context in which organizations operate today is fundamentally shifting, and so is the way in which we should think about change. Three critical shifts are fundamentally reshaping corporate change: 1. From point-in-time to all-the-time Change is no longer a project with a defined start and end. It is continuous, and accelerating. On average, employees now experience three major changes each year, compared with fewer than two in 2012, and nearly three-quarters of organizations expect more change initiatives to come in the next few years. As one executive I recently spoke to put it, “As soon as I’m done with one transformation, the next one begins!” While it is often said that change is the “new normal,” that nonetheless comes with profound implications. Being able to lead through change is no longer an optional skill. A recent study looked at boards that had initiated a CEO rotation and found the No. 1 reason was the need for someone with the ability to successfully manage change. We must rethink how we lead, how we engage teams and how we inspire individuals. How do we build greater sponsorship, influence, desire and commitment to change, as well as greater resilience, within our organization? The ability to successfully change—both as leaders and as organizations—is quickly becoming a source of competitive advantage. Bain Partner David Michels explains why leadership should not fear change, but rather embrace it as the new normal in the nature of business. 2. From analog to digital Advances in technology are reshaping both the challenges and possibilities change offers. Artificial intelligence (AI) is changing the nature of jobs and is shifting work that humans once did to machines. It necessitates a broader rethinking of the future of work. Yes, many jobs will go away, but many will be created, too, requiring smart management through this period of immense dislocation. Amazon in 2016 increased the number of robots it used by 50%, from 30,000 to 45,000 robots, securing a reduction in its costs and delivery times. Over the same period, it increased its human workforce by 50% to focus it on tasks requiring soft capabilities that would help better serve customers. This requires that companies cultivate an ability to retrain their workforce in new skills on an ongoing basis. The need for talent with advanced technical skills is far outstripping supply. In a 2018 study from IBM, 63% of respondents cited a lack of technical skills as a barrier to AI implementation. In response, an increasing number of forward-looking companies are now building cultures of continuous learning. They focus on developing both advanced technical skills and the human skills that go along with them. I see this in my own firm in spades. Our assets go up and down the elevator each day. If we don’t provide tools and advanced training for employees to stay relevant in the AI-enabled organization of the future, we are dead. In a world in which an increasing number of business decisions are made by machine, research has found only 10% of people trust AI to perform complex and high risk tasks. We need to find a new way to build trust not only between people but also between people and machines. Professional applications, for example, can be viewed with skepticism by human practitioners, who accept their results as confirmation, but balk when human and machine come to different conclusions. Yet increases in data and processing power are also unlocking our ability to approach old challenges in valuable new ways. Organizations can, in real time, collect and respond to data on operations, employees and customers. One example: Rather than taking a snapshot of employee sentiment in annual surveys, companies like Intel, IBM and Twitter have started using sentiment analysis to understand how their employees feel about their jobs in real time. A similar change is transforming customer management, as 70% of executives increase their investment in real-time customer analytics in order to make more effective decisions. 3. From fixed to flexible The very nature of the workforce is changing. Millennials already account for nearly 50% of the US workforce, and they are reshaping expectations. Over 90% expect to stay in a job for less than 3 years, far lower than historical average of 4.4. At the same time, the so-called gig economy is contributing to a labor market characterized by nontraditional, independent and short-term working relationships. One-third of all US workers have some type of gig work arrangement in place. Organizations’ boundaries are becoming more porous. Increasingly it is not just the internal but also the external ecosystem—comprising new kinds of talent, flexible working arrangements, and external contractors and advisors—that defines an organization. In this much more flexible environment one thing has not changed: human nature and our desire for stability, predictability and purpose. In a world of increased uncertainty, company culture and mission are becoming new sources of stability and purpose. We see a swell of organizations pivoting from shareholder value as their sole raison d’être to a focus on a broader purpose. A survey of 12,000 white-collar employees conducted by The Energy Project and the Harvard Business Review found that employees who derive meaning and significance from their work were more than three times as likely to stay with their organizations, the highest impact of any variable examined in the survey. These employees also reported almost twice the job satisfaction and were significantly more engaged at work as well. The scope of these three shifts is massive. It requires that we adjust to a future in which change cannot and should not be “managed.” A new normal, no longer defined by risk, fear and avoidance but rather by possibility, agility and opportunity, mandates that we not just manage change, but rather embrace it.

This article originally appeared on Forbes.com.

Traditional change management as we know it is obsolete. Even the very notion that change can be managed feels absurd given the reality and pace of business today. The intent of business executives—to deliver results more sustainably and more quickly—remains the same, but the context in which organizations operate today is fundamentally shifting, and so is the way in which we should think about change.

Three critical shifts are fundamentally reshaping corporate change:

1. From point-in-time to all-the-time

Change is no longer a project with a defined start and end. It is continuous, and accelerating. On average, employees now experience three major changes each year, compared with fewer than two in 2012, and nearly three-quarters of organizations expect more change initiatives to come in the next few years. As one executive I recently spoke to put it, “As soon as I’m done with one transformation, the next one begins!”

While it is often said that change is the “new normal,” that nonetheless comes with profound implications. Being able to lead through change is no longer an optional skill. A recent study looked at boards that had initiated a CEO rotation and found the No. 1 reason was the need for someone with the ability to successfully manage change.

We must rethink how we lead, how we engage teams and how we inspire individuals. How do we build greater sponsorship, influence, desire and commitment to change, as well as greater resilience, within our organization? The ability to successfully change—both as leaders and as organizations—is quickly becoming a source of competitive advantage.

Bain Partner David Michels explains why leadership should not fear change, but rather embrace it as the new normal in the nature of business.

2. From analog to digital

Advances in technology are reshaping both the challenges and possibilities change offers.

Artificial intelligence (AI) is changing the nature of jobs and is shifting work that humans once did to machines. It necessitates a broader rethinking of the future of work. Yes, many jobs will go away, but many will be created, too, requiring smart management through this period of immense dislocation. Amazon in 2016 increased the number of robots it used by 50%, from 30,000 to 45,000 robots, securing a reduction in its costs and delivery times. Over the same period, it increased its human workforce by 50% to focus it on tasks requiring soft capabilities that would help better serve customers.

This requires that companies cultivate an ability to retrain their workforce in new skills on an ongoing basis. The need for talent with advanced technical skills is far outstripping supply. In a 2018 study from IBM, 63% of respondents cited a lack of technical skills as a barrier to AI implementation. In response, an increasing number of forward-looking companies are now building cultures of continuous learning. They focus on developing both advanced technical skills and the human skills that go along with them. I see this in my own firm in spades. Our assets go up and down the elevator each day. If we don’t provide tools and advanced training for employees to stay relevant in the AI-enabled organization of the future, we are dead.

In a world in which an increasing number of business decisions are made by machine, research has found only 10% of people trust AI to perform complex and high risk tasks. We need to find a new way to build trust not only between people but also between people and machines. Professional applications, for example, can be viewed with skepticism by human practitioners, who accept their results as confirmation, but balk when human and machine come to different conclusions.

Yet increases in data and processing power are also unlocking our ability to approach old challenges in valuable new ways. Organizations can, in real time, collect and respond to data on operations, employees and customers. One example: Rather than taking a snapshot of employee sentiment in annual surveys, companies like Intel, IBM and Twitter have started using sentiment analysis to understand how their employees feel about their jobs in real time. A similar change is transforming customer management, as 70% of executives increase their investment in real-time customer analytics in order to make more effective decisions.

3. From fixed to flexible

The very nature of the workforce is changing. Millennials already account for nearly 50% of the US workforce, and they are reshaping expectations. Over 90% expect to stay in a job for less than 3 years, far lower than historical average of 4.4. At the same time, the so-called gig economy is contributing to a labor market characterized by nontraditional, independent and short-term working relationships. One-third of all US workers have some type of gig work arrangement in place. Organizations’ boundaries are becoming more porous. Increasingly it is not just the internal but also the external ecosystem—comprising new kinds of talent, flexible working arrangements, and external contractors and advisors—that defines an organization.

In this much more flexible environment one thing has not changed: human nature and our desire for stability, predictability and purpose. In a world of increased uncertainty, company culture and mission are becoming new sources of stability and purpose. We see a swell of organizations pivoting from shareholder value as their sole raison d’être to a focus on a broader purpose. A survey of 12,000 white-collar employees conducted by The Energy Project and the Harvard Business Review found that employees who derive meaning and significance from their work were more than three times as likely to stay with their organizations, the highest impact of any variable examined in the survey. These employees also reported almost twice the job satisfaction and were significantly more engaged at work as well.

The scope of these three shifts is massive. It requires that we adjust to a future in which change cannot and should not be “managed.” A new normal, no longer defined by risk, fear and avoidance but rather by possibility, agility and opportunity, mandates that we not just manage change, but rather embrace it.