‘We are evolving towards a new balance’

Peter De Prins (Vlerick Business School) on change processes

Source: Management Scope (February 2018); Author: Simone Heidema, Founder and CEO of CPI Risk, Finance & Governance. Heidema interviews and writes for Management Scope on risk, finance and governance.

An organisation’s ability to change is seriously threatened by new disruptions that arise whilst the after-effects of the previous disruptions are still making themselves felt. The solution can be found in fully charging six ‘batteries’, says Professor Peter De Prins at Vlerick Business School. ‘Compare the organisation to a toy car: a car won’t work anymore either if you remove one of the batteries.’

Peter De Prins - Copyright Pure PhotograpyThe room in which Peter De Prins had delivered a change management session to Dutch managers earlier that day is still buzzing with some of the energy that he generated during his lecture. You would think his own battery would be nearly flat after such a busy day, but it doesn't appear to be. In fact, De Prins seems to be simply continuing his lecture, sprinkled with one-liners, lots of humour, metaphors and examples borrowed from practice or his personal life. They animate his idea of how CEOs can rise to 21st-century challenges like digitisation and disruptive innovation with simple truths and timeless insights into the successful management of change. Because that is the thread running through his philosophy: change. De Prins lectures on this as Professor of Management Practice in Change Management, Coaching and Leadership at Vlerick Business School, advises companies who find themselves in the middle of a major change process, works as an executive coach for leaders who are facing a transition in their personal life or that of their organisation and writes on the subject. Six Batteries of Change, the book that De Prins wrote with Professor Geert Letens and his Vlerick colleague Professor Kurt Verweire, was published in mid-December.

Only a third of organisations are healthy

The book presents a simple model for organisational change: the consolidated experience of five years of literature research, interviews with managers and personal involvement in change processes. Analysing this led to the notion that successful change is about managing energy. The model consists of six ‘batteries’ - a metaphor for energy sources - that must be completely charged in order to achieve the desired change. There are three rational batteries (a clear strategy, strong management infrastructure and thorough implementation) and three emotional batteries (an ambitious management team, healthy culture and engaged employees). De Prins and his colleagues then tested the model by asking managers at 111 companies about the strength (or weakness) of their batteries and the effectiveness of their change programmes. The companies with the best charged batteries also turned out to be the most successful in achieving change. Hardly any organisations were successful across the board: only 35 percent of organisations were positively charged. In most companies, some batteries needed to be recharged. The batteries for management infrastructure and implementation demonstrated the lowest energy levels. De Prins and his colleagues also distinguish between four symptoms of an unhealthy organisation resulting from a lack of the required energy.

How important is the ability to change for organisations in the current management environment?

‘Crucial. Companies operate in a VUCA world: Volatile, Uncertain, Complex and Ambiguous. Until around ten years ago, it was humanity that initiated technological change and determined its pace. The credit crunch and the arrival of digitisation have led to a reversal: now technology is steering people. Developments like artificial intelligence and robotisation, for example, are unfolding more and more autonomously, at a pace that people can barely still keep up with. Previously, disruptive change had a cycle of between 30 and 50 years. So people only experienced it once in their career: events like the introduction of the computer or the mobile phone. Now the duration of this cycle is just one to six years and people are confronted with disruptive change four or five times in their career. These are also paradigm shifts, which have a significant impact on the way we think, communicate and behave, in all facets of our existence.’

What do these disruptive changes in quick succession mean for companies?

‘You can compare disruptive change to an earthquake. A well-built house will stay up but, if you look closer, there are cracks in the walls. You notice cracks appearing in organisations mainly through the loss of a number of loyal customers, less smooth operation of processes or an increase in the number of people suffering a burn-out. Previously, organisations had sufficient time to recover from one earthquake and reinforce their house to absorb the next. Today, the new earthquake often takes place while the repair work is still underway. Organisations find themselves in a process of permanent alertness and continuous change. Companies can no longer stop changing. This leads to organisational trauma, derived from the Greek word for injury. The employees at organisations feel injured and develop change fatigue.’

How do you make your diagnosis?

‘I make this ‘feeling injured’ clear in my sessions by asking a number of managers to stand for ten minutes with their arm stretched out, holding a glass. In the meantime, I simply continue speaking. After a few minutes, you can see the managers losing interest: they are no longer listening to me but focusing on themselves, because they are starting to experience pain and need all their strength to persevere in their difficult situation. Some people become angry and want to throw the glass at my head. Others rebel and put the glass down. At the end, they cannot recall a word of what I had said in the last ten minutes. You see this pain in organisations too: people get tired and angry about the continuous change and shut themselves off from the story the management are telling. They are entirely preoccupied with surviving with as little pain as possible. It’s not the glass, the change itself, that is experienced as difficult, but the fact that you can’t bend your arm now and then to put the glass down for a while.  We measure this change fatigue by carrying out a full audit of all the batteries. Once all the batteries are empty, there is very little time left.’

How can leaders reduce or avoid this organisational trauma?

‘It’s not just about managing change, it’s primarily about managing stability: giving people the chance to relax their arm regularly. Giving people a sense of business as usual. You can do this on a personal level by, for example, making use of the progress effect: tell people not just what is changing but also what is staying the same. At an organisational level, leaders can do this by ensuring that the innovation primarily takes place outside the organisation, rather than within it. This is the tanker-speedboat model. An organisation is like a tanker: large, cumbersome and hard to manoeuvre. Speedboats are not. Put some employees on a speedboat and let them to develop, think, create, innovate. By allowing this to take place in a separate organisational unit, the speedboat, you prevent the tanker, the whole organisation, from continuously having to change course and becoming rudderless or broken. Many managers already apply the tanker-speedboat concept, but do not do so correctly. Employees on the speedboat are given their speedboat task on top of their normal tasks. That does not work. Or the speedboat is a miniature version of the tanker and is subject to the same systems as the going concern. That’s no good either: a speedboat should be self-managing, without too much hierarchy or too many reports. Employees need to work on this project full time, for a specific period. Give these talented people the freedom to achieve genuine innovation. A liaison officer helps to create a link between the speedboat and the tanker.’

How do you then transfer the innovation from the speedboat to the tanker?

‘When people return from the speedboat to the organisation, they can function as ambassadors for the innovation. So allow the change that was developed by the speedboat to permeate the organisation little by little. Take apps that respond to the consequences of the digital transformation for contact with customers, for example. The employees in the tanker can simply continue to carry out their work, but will also be trained in integrating these apps into their daily activities. This change, implemented little by little, might be slightly painful now and then but there is also a sense of business as usual. This process of gradual progress is better than a sudden change. Lethargic organisations sometimes realise suddenly that they are a long way behind the competition and then start pulling at the grass to make it grow more quickly. But then they encounter a paradox: fast change mostly goes very slowly.’

What characterises successful change leadership?

‘Being clear, generating energy and being able to combine emotion and rationality. First of all: make clear choices. Leaders in the business world must have the courage to be very clear. Don’t think for too long, make a choice and get behind it 100 percent. Of course you need to stick to the framework of strategy, stakeholders and regulations, but thinking too much and for too long about the right thing to do will leave you paralysed, at a standstill. ‘Analysis paralysis’, as they call it. Dare to prototype: consider, choose, do. If it doesn't work, learn from it and choose something different. Clearly highlight this resolute choice. Organisations think that they communicate the message well through road shows, the intranet or brochures, but people filter this information and give it their own interpretation. Creating clarity is mainly about knowing for sure that people have actually heard the message that you want to express as leader and are taking that with them into the workplace. This chance is significantly higher if you take the context in which you communicate this message into account. How, where and when you sell the change to the organisation is much more important than what you say. We call this the context of the change. Paying too little attention to this context is a major reason for the failure of change processes.

Next: be the energy you want to see. It is difficult to inspire people if you don’t have much charisma. A story about falling market shares will not usually excite people. But when people realise for themselves that their core values - what they attach the greatest value to in their life: their family, their integrity, their aspirations - are under pressure, they are prepared to change. Finally, the emotions go for short-term satisfaction. Rationality favours long-term satisfaction. The emotion of short-term satisfaction is usually stronger when it comes to behaviour. If a leader states that he or she wants to simplify the organisation, but people continue to face the same Kafkaesque situation they have been dealing with at their desks for years, the emotion of the moment will outweigh the rationality of your story. So you will only create cynicism.’

Can you give a practical example?

‘After many takeovers, an insurance company had become a complex organisation with 150 different project systems. The CEO wanted to announce in a speech that the organisation would be simplified. I advised him to postpone the speech and take action first. During a tour of the company, we found ourselves in a room where administrative employees regularly had to write out 17-figure policy numbers by hand from an old-fashioned software system, as the organisation had not succeeded in linking the computer systems. This was the way to show that simplification was sorely needed. After lots of puzzling, we managed to integrate that old system into an existing software package in a weekend. When people came into the office on Monday, everyone was talking about it all week: ‘Finally, someone has had the balls to do something about this.’ On the Friday of the same week, the CEO held his speech about simplification of the processes for the top 600. The buy-in was high. First the context, then the message. First let people see what you mean with the change and then tell them the message. Creating the right context helps to appeal to people emotionally and provide fertile ground for the rational explanation. In this way, you create the energy to achieve real change.’

In order to unlock this energy, do leaders have to charge all the batteries of the organisation?

‘Yes, the batteries form the vital energy sources for the creation of optimal change. Compare it to a toy car: if you remove one of the batteries, the car won't work anymore. The same applies to change processes. A company can have a great strategy, but if there is a toxic culture and the management team is constantly arguing, success cannot be achieved. Conversely, if the culture is close and warm, but the organisation does not have a clear strategy, this will also create difficulties. So every battery must be sufficiently charged to be ready for change in terms of energy. It is said that 70 percent of all change processes fail. This has almost become a mantra. Our research found a lower failure percentage of 30 to 58 percent, depending on the success criteria, such as achieving and maintaining the desired result or the expected timing. We also found that 65 percent of the organisations investigated did not have all their batteries positively charged and that 30 percent were chronically sick.’

How can a leader change this?

‘Start with the battery that is the emptiest. Make sure the batteries are charged all the way up one by one, so that people feel engaged with the change again. An example is a company that was financially very successful with one product in one sector, but nevertheless scored very poorly on all six batteries. This was because the management had not considered the future and the technological threats it posed at all. The result of our audit functioned as a wake-up call. The company is now diversifying, innovating and looking for new sales markets.’

Which company does have six full batteries?

‘The Belgian bank KBC. The management of the bank has made clear strategic choices, created a speedboat for innovation, had the balls to make money available by pulling out of investments in Eastern Europe and created the right internal change culture. The CEO operated a no-bullshit policy: encourage, don’t tolerate. He encouraged change with training, time and money, but did not allow his managers not to change. He indicated clearly which agreements were non-negotiable. Compare it to a fence around a playground. When children sit on the fence, the first time you say, ‘Get down.’ The second time you say, ‘Next time you do that, I will send you home,’ and the third time you actually send them home. A leader is the boss of his or her own playground: when do they climb on your fence? Where are the boundaries? When do say: ‘If you do that again, you’re out’? What is non-negotiable? Be clear in advance about what the consequences are if managers do not cooperate in the change. To prevent misunderstanding: this is not dictatorial leadership. Quite the opposite. I would call it encouraging leadership. In fact KBC had more patience with its employees. A lot of time was spent on listening, involving and coaching over a long period.’

Is our society chronically sick?

‘No, I don’t think so. But we are in a transition phase with very big changes and that causes pain. Rapidly evolving technology is the main driver of this. The increasing complexity of society is making it more and more difficult to make clear choices with wide support and therefore to implement them. However, achieving objectives, commitment and focus are important factors in happiness and success, both in organisations and in society. In an organisation, the management team should make these choices, as a band of brothers with strong alignment and visible passion. One voice, one message. It is more difficult in politics. Nonetheless, politicians may also benefit from reaching a single standpoint more quickly and often, then unanimously defending it and visibly achieving it. The will is definitely there, but it often goes either far too slowly or suddenly much too fast. Then citizens lose their sense of stability, which causes them to turn inwards. That in turn increases individualisation in society. But I feel positive. People are flexible. We are definitely evolving towards a new balance.’

Want to read more? Download the whitepaper 'Batteries of Change'.

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