Every company, across industries, of all sizes, is exposed to disruption. According to research from NextGen Personal Finance, the accelerating pace of change is decreasing the average lifespan of most companies. Some predict 50% of the S&P 500 will be replaced in the next decade.
This disruption can come from a variety of places, with common catalysts being mergers and acquisitions, technology and regulatory changes. But no matter what prompts the change or transformation, adapting is challenging for any company. There’s a famous statistic that 70% of all change initiatives fail due to employee resistance and a lack of support from management. Making a successful change, therefore requires improving in those areas.
Enter: Dr. Tom Tonkin is a Senior Principal with Cornerstone’s Thought Leadership & Advisory Services department and an expert on change management. He has been helping companies navigate it for over a decade.
"We all should have some understanding of people’s behavior and change, no matter what job we do," Tonkin says.
With 2020 set to see even more disruption, we asked Dr. Tonkin to share some of his learnings about why change initiatives fail and how a different mindset can lead to better outcomes.
Let’s start with that data point: that 70% or more of change initiatives fail. What are companies getting wrong?
That number has been around for decades. The first reason people get it wrong is because they fail to see that change is a people thing. The second reason is they approach it with the wrong mindset. Instead of being prepared that something probably is going to go wrong—and they just have to figure it out and communicate it and get through it— they fold their arms and say, ’I can't believe this happened,’ and get outraged and start blaming people.
You also say that people tend to mistake—or not know the difference between—change and transformation. Can you talk a little bit about that?
Some of my customers try to give me a 64 page transformation plan. And I tell them no, that is a change plan. Change is just doing things better, faster, cheaper. You’re going down a pretty well-known path so you can plan out every single step.
A transformation plan is closer to three pages because you likely know the first two or three steps, but after that it’s kind of fuzzy. You’re just going to have to work it out when you get there. Usually, the reason people will transform is because the pain of remaining the same is greater than moving to something different. That's the only time you'll actually change into something else, or transform into something else. That's true for organizations. If I'm hemorrhaging my revenue, and I am losing in the competitive environment. Doing stuff faster and cheaper and better is not going to be able to help me.
What’s your advice for executives leading these initiatives—whether it’s a change initiative or a complete transformation?
We often say things in business, "Then the organization struggled," or, "The company was lacking skill." But that’s a mischaracterization. The accountability and responsibility is abstracted away. Organizations don’t struggle, people struggle. People lack skills. And companies don’t change or transform—people do.
My clients will come to me and they'll say something like: "And then we had a bad quarter, and then I was just really upset." I stop and I ask them, "Well what was it about your leadership that made that happen?" Their first reaction is like I'm blaming them. But the reality is the minute you push off the blame or try to rationalize something, not only have you pushed off the blame, but you've also pushed off the solution. As a leader, that's not where you want to be. If you take the culpability, what you're also doing is you're taking on the ability to solve the problem too.
If business leaders don’t necessarily know how they’re going to transform, how should they be preparing for a potential transformation?
The best time to start a transformation is when there's no need to. When your margins are good, when things are happening, when your clients are happy, and you have some foresight. That’s when to start thinking about doing something different.
Think about a caterpillar turning into a butterfly: Before the caterpillar goes into the cocoon, it eats a lot to get all of that energy to go through the process. Sometimes what I've seen is, people can't go through a transformation because they run out of resources. They run out of time, they run out of money. Then all of a sudden, it's like, well, we failed in the transformation. Well, I don't know if you failed in the transformation as much as you weren't prepared for one.
What do you find is the most impactful for helping executives rethink their approach to change and transformation?
Most people approach change initiatives like okay, I've got these plans, I've got this Gantt chart and I've got all of these documents and communication plans—we're going to do this right. The minute you come to the appreciation that guess what, we're people. We have different expectations; we have innovators and laggards. We're probably going to land on some challenges that we're going to have to deal with. The minute you land there you're going to be successful. It's really hard to land there, because you have to admit to yourself and to everybody around you that something's going to go wrong.
For more advice from Dr. Tonkin and other HR leaders about how to manage change and transformation at your company, download Cornerstone’s 2020 Transformation Guidebook here.
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