You must attach the right structure, systems, and incentives in order to shift employee mindset.
If your firm has previously gone through the strategic planning process, there’s a decent chance the endeavor was commonly viewed as a failure once implementation rolled around. If that sounds familiar, you’re not alone. According to the Harvard Business Review, 48 percent of organizations fail to meet at least half of their strategic planning targets. Part of this is due to a lack of commitment and the other part is down to poor change management.
So, what is change management and how does it prevent you from being added as a data point to that statistic?
Change management, at its core, are the methods a company uses to guide organizational change from start to finish (plan rollout and successful integration of your initiatives). This could include a significant transformational change, smaller scale adaptive change, or change at the individual level. Examples of these would include changes to the firm’s organizational structure, addition of a new software/changes in company policy, or smaller scale changes such as an individual’s role within a firm.
Typically, the greatest challenge of change management involves navigating the complexities of altering the human element within an organization. This encompasses everything from shifting an engrained organizational culture to transforming the mindset of individuals.
According to professor Thijs Homan, in organizations characterized by the usual complexities that come with human dynamics, there typically exist two prevailing perspectives on how to manage or implement change. The monocentric view advocates for a top-down approach, where change is driven by management decisions. This perspective assumes that the organization is inherently resistant to change, and it is through the deliberate actions of leaders that change is initiated and managed. Conversely, the polycentric perspective suggests that change is a more organic process, emerging from multiple sources within the organization. This view recognizes the diverse and dynamic nature of organizational life, where change is the cumulative result of actions taken by individuals at all levels.
My perspective leans toward the polycentric side of these two views. When leading change within an organization, you’re often seeking buy-in from a group with dissimilar opinions and perspectives (as planning consultants, we see this on a frequent basis). Individuals with their own cause or even coalition within the company. This is why change is not only the result of quality guidance from management. Change is influenced by everyone, but totally controlled by no one. In order to herd cats, leaders must apply the right structure, systems, and incentives that encourage everyone within an organization to make decisions that pull in the same direction. In other words, leaders need to make decisions that allow others to make the right decisions. As professor Thijs Homan put it, you must transform these changes you’re hoping to happen, into changes that you are wanting to happen.
To put all of this consultant speak into action, let’s use an example.
When managing the company in its early years, Jeff Bezos wanted Amazon to become the “earth’s most customer-centric company.” This is a slightly abstract objective – one that in many organizations would take the form of a mission statement, possibly evolve into a checklist, and ultimately be shelved and forgotten due to poor implementation. Although, almost anyone who has ever reached out to Amazon support can testify that he achieved this mission – but how?
Bezos didn’t just remind his leadership team, managers, and staff during conference calls of what he wanted from them. He also didn’t make every decision that turned Amazon into what it is today. He implemented guidance and incentives on how to make this a reality. Bezos implemented a data-driven department structure based on customer success metrics, equity compensation, and performance compensation based on customer success metrics, prioritizing product pricing over profitability through negative or low margin guidance, strategic distribution center locality for faster delivery, a lengthy and questionably flexible return policy. He even required managers to attend call center training to understand the needs of Amazon customers. Not to mention his notoriously strange empty chair policy, which featured an empty seat in meetings to represent the customer, “the most important person in the room.”
Bezos implemented incentives that motivated his people to make decisions that aligned with the company mission statement.
The idea of implementing an effective overarching incentive structure may seem obvious, but it’s commonly forgotten in the details of a strategic plan. Understandably, planning leaders often fail to see the forest for the trees. This can separate a good leader from a great leader.
Going back to the 48 percent failure statistic – in many cases, successful implementation comes down to your people not executing the strategies assigned to them due to their existing workload taking priority over those initiatives. After a period of time with no traction, the plan gets left behind. In order to shift employee mindset and manage this period of change effectively, you must attach the right structure, systems, and incentives to make the plan a priority. As the saying goes, tell me the incentives and I’ll tell you the outcome.
If you believe your firm could benefit from a plan that garners firmwide buy-in, Zweig Group has a team of strategic advisors here to help. Click here to learn more.
Travis White is a strategy and operations advisor at Zweig Group. Contact him at twhite@zweiggroup.com.
