THE CHANGE REPORT: What holds leaders back, and how they can have an impact

Steve Jobs was one of the great change leaders. Photo: Getty

More than ever, organisational change is an inevitable part of today’s corporate landscape. Regardless of the industry, the majority of organisations are now being pushed to undergo some element of change to either defend their market leading position or gain market share.

Change management is complicated, and there are time-tested, proven models for doing it well. But in 2017, the strategies that proved successful in the past are not as readily applicable.

While a lot can be gained from following in the footsteps of successful managers, the BI / Research Change Report also examines what can be learned from the managers that have failed.

With disruption being the only buzzword hotter than innovation, leaders are being challenged to change in new ways.

Historically, success for organisations was in increasing revenue, market share or profitability. With the potential for disruption by some new challenger or technology now ever-present, business leaders need to be more wary of the impact of a competitor or new industry entrant that changes the rules, in the way that Facebook changed the news industry before they even realised it was a competitor.

To read more about how the market-leading companies are dealing with change, read The Change Report at BI / Research. Registration is free, and also gives you access to exclusive Australian industry research as well as 25 reports from our US parter’s in-depth subscription service, BI Intelligence.

But if there are infinite types of scenario planning that organisations use to assess competitors, why are they still being caught out? The simple answer is that old methods cannot fix new problems.

The key change challenges

Driving cultural change

For organisations seeking to become more adaptive and innovative, cultural change is often the most challenging part of the transformation. Innovation demands new behaviors from leaders and employees that are often antithetical to corporate cultures, which are historically focused on operational excellence and efficiency.

In terms of organisational culture change, explaining the need for change is a start — but on its own, won’t cut it. Creating a sense of urgency is helpful, but can be short-lived. To harness people’s full, lasting commitment, they must feel a deep desire, and even responsibility, to change.

A leader can do this by framing change within the organisation’s purpose — the “why we exist” question. A good organizational purpose calls for the pursuit of greatness in service of others. But even if someone with authority can demand compliance, but they can’t dictate optimism, trust, conviction, or creativity.

A strong culture can work against companies in a changing world

Research by Willemien Kets and Alvaro Sandroni from the Kellogg School of Business suggests that a strong culture serves a purpose: it sets expectations, increasing the likelihood that, faced with uncertainty, members of a team will all be on the same page. But in fast-changing industries, or in a tumultuous economy, the broader diversity of viewpoints that a weaker company culture engenders can lead to fewer missed opportunities. Their research notes that: “Excessive conformism hampers the ability of an organization to adapt.”

Alternatively, a weaker company culture—one that is unconstrained, a little chaotic—will lead to less conformism. An organization composed of diverse viewpoints, and even dissent, may not run as smoothly or efficiently as possible. In a crisis, everyone may not be on the same page; there will be mishaps and mis-readings. But the lack of an established way of doing things—the sheer unpredictability of every encounter—increases the likelihood that, if there is a better outcome, people will find it.

Rigid operating models can hold Australian companies back

Why does being capable of change matter? Consider this: data from index provider S&P Dow Jones shows that of the 200 companies in the ASX 200 index at its launch in April 2000, only 59 remain. The others have fallen victim to M&A activity (St George, Adelaide Bank, WMC, MIM, North Limited, C&W Optus, Fosters, Lion Nathan amongst others) or changing industry trends.

The turnover in the list suggests a lack of flexibility by many large Australian corporates leading them to be vulnerable in a fast-changing world.

Rigid operating models and a lack of visibility or insight into what creates value for the organisation is exacerbating the problem. A report by Accenture Consulting found that only one quarter of companies surveyed have a flexible operating model that can adapt to consistently deliver on strategy and execute activities that drive value for the organization.

Digital technologies can create huge opportunities for organizations in all sectors. But, the benefits can only be realized by companies that can change to take advantage of this new world.

You can get the full report at BI / Research, free to registered users.