Leading Exponential Change

by Erich R Bühler

  My work with Peter was done. I was happy to have participated and witnessed the growth and change of his company.

  Reaching Sustainable Change in the Company

  You can use several approaches to achieve sustainable change, but for all of them you’ll need people who are able to connect informally and analyze opportunities and problems from different points of view.

  Regardless of what you want to modify, it is always a good idea to experiment first with a small part of your organization and then expand. This allows you to demonstrate that the concepts work and to know in advance how to scale these new ways of working to the rest of the company.

  Many initiatives entail testing of new company values. People need to feel safe, but they must also be able to leave their comfort zone. You won’t be able to guarantee success until you have acquired knowledge through experimentation in real scenarios.

  If you promote the right conditions in the organization, you’ll see that people will gradually take ownership of your vision and strategy. If all goes well, they will start thinking about expanding these ideas through the company without you constantly pushing the initiative.

  You’re probably wondering what techniques you can use to implement a change in the company.

  FIGURE 3.6: Four approaches to transform your company

  I’ll show you four approaches, though you’ll have to use a mixture of them based on the situation and the level of motivation in your teams.

  Making a Change by Implementing a Top-down Approach

  In a top-down approach, leaders or senior management create the vision of change and define the strategy. This approach is common where decision-making is centralized in the higher ranks of the company. Here, managers usually make preliminary studies and evaluate the benefits, costs, and affected areas. They verify the progress of the strategy and its subsequent implementation. It isn’t surprising that more-traditional companies make simple loop decisions (as illustrated in the previous chapter) during the execution stages of a change plan.

  Imagine that the CEO decides that the minimum unit of work is two people and that all tasks must be done in pairs. My experience indicates that this type of behavior is difficult to implement in a sustainable manner. However, because the director has the authority, employees will assimilate it as something that is expected and part of their role in the company.

  The biggest drawback in top-down approaches is that the change can be seen as an action imposed by management. Such a situation can lead to interpersonal conflicts and greater resistance in the long term. Do employees do it because it is mandated or because they feel inspired and want to learn and improve?

  “People do not resist change. They resist being changed.”

  Peter Senge, Scientist

  The initiative’s success in these cases will depend on whether a positive and trusting relationship develops between those who implement and execute the strategy and those who will be affected by the change.

  It’s a good idea to use rules that decentralize the control of economic decisions (in other words, to allow others to learn and make decisions without consulting you).

  In the aeronautics company Boeing, assembly-plant workers can make design changes or substitutions of aircraft materials of up to $300 as long as the change results in savings of at least one pound off the aircraft’s total weight. In these cases, the decentralization of decisions encourages creativity and learning while decreasing pressure on the upper layers of the organization to supervise all tasks.

  The top-down approach can also prove useful when you need to adapt the whole organization to new principles, or when structural changes affecting the pillars of the company need to be implemented.

  Just remember that it isn’t realistic to manage a top-to-bottom change when market alterations are constant and knowledge requirements are difficult to predict.

  Such is the case for the software-development industry, where you need various roles and constant collaboration from different areas to create a single product. If you think about it, the interventions here require specialized and scarce skills, or experts far below those who order the change. Generally, this kind of specialized knowledge isn’t found higher up the corporate ladder, so making top-down decisions logically increases the risk. In this case, you can use a variation of the top-down approach where strong leadership fosters the auto-organization of individuals around their objectives.

  Steve Jobs led the consumer-technology market and created exceptional devices with cutting-edge designs. When Jobs launched the iPhone in 2007, he stated that his vision was to have a computer, the software, and a touch screen within a single device.

  Apple rarely listened to focus groups or included market trends in their phones. Jobs usually expressed what he wanted through a vision, enabling his teams to self-organize and implement his plans, change strategies, and metrics.

  As you can see, a single approach can lead to different tactics and deliver different results. If you lead with a clear vision, you can allow room for those involved to create their own change plan and determine how they will proceed through the self-organization of their tasks and responsibilities. This creates space for innovation and for teams to make decisions and learn without having to constantly involve middle management.

  Initiating the Change: From the Local to the Global

  In the local-to-global or bottom-up approach, gravity works backward—and with different rules. This type of change is common in software-development or digital companies.

  The exponential acceleration of markets initially requires that software teams are closest to the client. IT departments commonly use the Scrum framework, which encourages several positive habits:

  Self-organization of the team around goals and daily tasks without the need for management control.

  Working side-by-side with clients and focusing on business value.

  Technical excellence in everything that is produced.

  Fixed length work cycles (Sprint) of one to four weeks.

  End-of-cycle reflection sessions on what could have been done differently and action points to improve processes and interactions.

  Daily team meetings to promote visibility and coordination among team members.

  This way of working generates knowledge quickly, so it’s considered by companies as a platform toward the transformation of the entire organization (re-creation).

  Constant face-to-face communication between team members and clients provides a high level of information exchange. In turn, making collaborative decisions accelerates the development of ideas. Individuals feel more motivated because they are the main actors in their change strategy. They will, therefore, do everything in their power to achieve success. This includes taking over the improvement and evolution of their practices, processes, and interactions.

  Management, however, encounters many inconveniences during the first months of using Scrum, because managers have to stop themselves from controlling people and start focusing on removing obstacles.

  Some may feel that they lose power, and this could generate setbacks. In the next chapter, I’ll explain how to deal with this issue.

  When implementing Scrum, or any other modern framework, you’ll see that companies usually employ pilot projects, allowing them to test an idea and reduce risks. A trial period is usually established for a limited number of teams to use the new rules, values, principles, and practices. Once the change proves its value, new habits and knowledge often spread quickly to the rest of the company.

  The expansion of the pilot project to the rest of the company may vary depending on the risk or uncertainty about the change. In some cases, the first pilot team finishes, and a second pilot group begins. Other companies prefer an overlapping approach in which the second group starts a few weeks before the first pilot group has finished.

  When you use pilot projec
ts, remember these three important points before expanding them to the rest of the company:

  This type of project requires highly motivated people, which could cause the rest of the company to be depleted of appropriate talent as key employees are transferred to the pilot teams.

  It’s a good idea in the early stages to use automated processes and artificial intelligence so you know in advance the scarce areas or resources and start thinking about how they will become exponential in the near future.

  When expanding the learning of the pilot teams to the rest of the organization, you could inadvertently introduce the problems of those areas (the unhealthy habits) into the rest of the organization. Pay special attention to this.

  A successful change requires more than quickly disseminating knowledge to the rest of the company. The efforts to transform the company from the bottom-up creates the approach and the initial conditions for sustainable change, but they’re not enough to achieve it. A high level of employee motivation is needed for bottom-up transformations to be successful.

  Embarking on a Change by Introducing It Little-by-little

  Another alternative is to introduce new ideas little by little (organic). In this approach, you implement each process or practice until you complete a larger goal.

  Imagine that the goal is to implement a framework that has six practices: You will implement one and wait until you see that the adoption has been successful. Then you will continue with the second, and so on, until you have completed the proposed plan.

  Management usually approves this approach because it entails a small experiment with constrained and controlled results. Because the cause and effect of a change tends not to be linear, the addition of a minor new practice could be really positive or very negative. These in turn will either move the company in the right direction or cause the initiative to quickly lose traction.

  Losing traction can be an inconvenience, because it often leads to a return to old habits. If this happens, you should analyze the cause of the loss of motivation and reformulate your plan or use the micro-habit technique that we’ll explore later on.

  You can create an organic change when there is no clear sense of urgency, if the risk of implementing everything at the same time is high, or if you need to experiment with something small because you do not know if it will solve the problem. In any case, you’ll need clear metrics that allow you to detect a setback as soon as it happens.

  Making a Change Using Micro-Habits

  Micro-habits are actions that require little effort, or minimal motivation, to complete. Over time, micro-habits build slowly upon themselves until they result in something significantly larger.

  The beauty of a micro-habit is that you can make a huge impact without large amounts of energy, major plans, or coordination. This is because of a psychological phenomenon known as the behavioral impulse, which I explain further on. Basically, once you start a micro-habit, you have a better chance to build a longer-lasting habit.

  Some years ago, I taught seven simple techniques so that Product Owners could say “no” indirectly to their clients or stakeholders, and I also taught a small micro-habit to reaffirm these techniques. That small change made it possible to reduce queues of unnecessary requirements, increase team morale, and increase innovation. A small habit with a great impact!

  Micro-habits also help in making personal decisions in cultures where group decisions are prevalent. I share more about micro-habit techniques in the next chapter.

  As we’ve seen, employee commitment is needed for an incremental and sustainable change. Remember that incremental implies that it has a clear story line between the progression of the different plans (which support each other) and a connection with the vision of change. Sustainable means that you will not have to push it every day. Instead, motivated individuals will take over the change plan and help it grow and evolve.

  Regardless of the approach you use, you must be able to demonstrate that any change initiative can be easily capitalized. For this, I suggest you follow these seven recommendations, which will enable you to create your own approach:

  If you start with pilot projects, invest several days on the liftoff stage of the initiative.

  Make learning and economic benefits visible. The change will come easier if it translates to economic advantage for the company in addition to being a way to test new ideas, values, or ways of working.

  Ensure that the pilot project demonstrates areas that could be automated or supported with artificial intelligence to convert limited or scarce (linear) resources into exponential ones.

  During the first stage, focus on removing obstacles to facilitate experimentation. You can also expand your idea to other teams to ensure you’re on the right track.

  Use your clients as much as possible. They are a huge network of brains that can offer valuable feedback, come up with solutions, and help you detect shortcomings in your strategy.

  When you expand the new processes, framework, or other solution to the rest of the company, focus on high-priority problems. Begin by removing blockages that restrict the organization from competing or better adapting to the markets.

  Finally, focus on accelerating those areas of the company that make it possible to develop capabilities, so that your initiative is sustainable in the long term. This may include changes in infrastructures or the use of a technology to accelerate knowledge.

  A good change approach also requires that you understand the way people act upon change. In the next chapter, you’ll learn key change techniques related to neuroscience, psychology, and organizational patterns.

  What You Have Learned

  How to create a powerful vision of change.

  The characteristics of a sense of urgency and learning.

  Techniques to create a vision of change in a collaborative way.

  The role of the sponsor and the transformation team.

  The different levels of commitment in employees.

  Different approaches to implement a change.

  What four types of messages should you include in your vision of change to make it powerful?

  What are some of the sponsor’s responsibilities when implementing a change initiative?

  How can a sense of urgency be created?

  What are some of the tasks that a Transformation Team should perform?

  “We are what we repeatedly do. Excellence, then, is not an act, but a habit.”

  Will Durant, Philosopher (based on Aristoteles)

  Congratulations! You’ve established a new framework in your company and now everything revolves around leading with innovative concepts, practices, and processes. Your organization is making decisions based on business value, everyone is aligned with the principles and new habits, and most initiatives seem to be on track. But then progress begins to lose traction. You decide to speak with the team members, because you believe the problem might lie in a lack of general knowledge or understanding of the ingredients of an exponential company.

  To your surprise, they do know about the exponential acceleration of results, they have mastered techniques to analyze complex problems, they are practically experts in Agile, Scrum, Lean, eXtreme Programming, mindsets, and frameworks, and they have the support of their managers.

  They also know that company transformation has ceased to be optional and is now an imperative business requirement. They acknowledge they must change as often as needed. But the initiatives continue to lag, and you wonder what could be wrong.

  A senior manager from a company I helped some time back once said, “Logic always prevails and people will modify their opinions if they are shown evidence and a good reason for doing so.” This belief resulted in meetings with empty chairs, because emp
loyees were too busy to attend, trying to “put out last-minute fires.”

  You can’t alter how people work or think without remembering that our brains are not built to accept change or contradictory information easily.

  One Monday morning, I was heading out to hold a workshop at an Agile conference in Austria. To be honest, I’ve never liked getting up early, and I hardly notice my surroundings until I’ve been awake for a few hours. I remember, though, that the plane was full and noisy. I was focusing on the material for my presentation when I overheard someone speaking about something that caught my attention.

  Four people next to me were fervently discussing human rights, Trump, and the situations in Europe and Catalonia. Each had their own ardent and well-developed point of view, based on information that seemed factual and solid. The conversation drifted to other parts of the world, such as North Korea and the United States, and then to the 9/11 conspiracy theory and the explosives allegedly placed by the US government in the parking garages of the towers. Finally, someone concluded that humankind had never reached the moon.

  At first, the thread of conversation seemed rational, but it progressively became less so. They took turns pointing out that Armstrong’s moon-landing photos showed no stars, that there couldn’t have been waves on the flag because there’s no wind on the moon, that the astronauts’ shadows couldn’t be real . . . The more any of them presented their “scientific” evidence, the more the others would disagree.