Six best practices for continuous change

Source: Management Scope (16-05-2019); Author: Marike van Zanten | Photo: Gregor Servais

COOs increasingly operate on strategic levels, translating external developments into their organisations and implementing necessary internal changes. However, in practice, these continuous changes raise dilemmas. This balance between innovation and continuity is the topic of conversation of a new advisory board in Management Scope magazine. Three Dutch COOs and Professor of Leadership and Coaching, Katleen De Stobbeleir, together devise six best practices to allow problem-free navigation between innovation and continuity.

Management Scope - De Raad over verandering
From left to right: Jellie Banga (Triodos Bank), Frits Eulderink (Vopak), Karin van Baardwijk (Robeco) and Katleen De Stobbeleir (Vlerick Business School).

We hear sonorous sounds penetrating Vopak’s boardroom, located high above the River Meuse. It is a ship turning on the river, explains Chief Operation Officer Frits Eulderink. This is an excellent metaphor for the topic of conversation: Changing Leadership. The two other COOs at the table are Karin van Baardwijk (Robeco) and Jellie Banga (Triodos Bank). Their practical experience is complemented by the science-based views of Katleen De Stobbeleir, Professor of Leadership and Coaching at Vlerick Business School. De Stobbeleir conducts intensive academic research into adaptive leadership: Leading organisations in terms of agility and adaptability so that they can survive in these turbulent times. With her background in both applied economics and organisational psychology, De Stobbeleir looks at not only the hard factors but also the soft factors, such as the influence of human nature and culture on change processes.

Tsunami of data

Change is familiar terrain for these COOs. Their organisations are fully concerned with disruption, digitisation, and sustainability in the broadest sense, in other words, the call for a positive contribution to society. This requires continuous change, with the purpose, i.e., the organisation’s higher social purpose, as the starting point.

All the organisations at the table operate in complex social domains. Vopak, a tank storage company, is active in the oil, gas, and chemical industries, where energy transition is an important theme. Triodos Bank has been investing and providing banking services with a positive impact on people and the environment for 40 years. Asset management company Robeco considers sustainable investment of paramount importance. Furthermore, all three organisations have to deal with the influence of new technological possibilities and a tsunami of data on their business models, changing needs of customers and employees, and a tight and increasingly flexible labour market.

It’s at the COOs’ offices where all these developments come together: they are increasingly operating at strategic levels, transforming external developments for their organisations, and implementing the necessary internal changes. How does this look in practice? What are the main battles, which dilemmas do they encounter, and how will they deal with them? What advice do the four around the table have for other COOs, in their capacity of ad hoc advisory board? Here is their vision on changing leadership in the form of six best practices.

1. Start from the purpose

Companies are at the heart of society: (potential) employees, customers, chain partners, and other stakeholders all expect a responsible approach. What is the best response to a changing societal context?
De Stobbeleir: ‘People want to connect to a higher purpose; they are looking for meaning. This works as an internal compass when they navigate towards companies they want to connect with. As a leader, you and your employees must formulate and try to proclaim a shared purpose.’
As an asset management company, Robeco is also working on this, says Van Baardwijk. ‘We are seeing a trend of moving from welfare to wellbeing. Our purpose is exactly in line with this. We want to achieve maximum long-term returns sustainably. As a financial institution, we aspire to move with the changing needs of our customers and the labour market.’
Banga: ‘Organisations need to have a good knowledge of the external context, which they should then translate to their own mission. They should ask the question: what do all these changes mean for us? Triodos’ purpose is to use the power of money to change society and at the same time to change the financial system. The turbulence within which you operate must not cause you to lose your footing. In fact, it is the other way around: the purpose creates focus and helps to determine the trends on which to focus or not.’
Eulderink agrees: ‘Vopak's purpose is the careful storage of vital fuels and raw materials, now and in the future. With this as our starting point, we try to play our part, also in the energy transition. For example, we are investing in a solar farm in Eemshaven. Careful actions are also an important part of our purpose, for example, in terms of safety and environment. It is important to be transparent and also consider the societal impact. The demands made on businesses today are entirely different from what they were 20 years ago. If you want to remain a leader, you have to lead the way.’

2. Use scenario analysis for dealing with unknowns, but remain flexible

Twenty years ago, there was less turbulence, and strategic planning was a lot clearer than it is now. Digitisation, disruptive innovation, but also geopolitical and economic shifts make looking ahead and predicting increasingly difficult. So how can organisations deal with this uncertainty?
De Stobbeleir: ‘There are more and more unknowns for organisations. Look at the way in which China is developing, look at the trade policy of the United States: anything could happen. As an organisation, be aware of these unknowns and realise that you can no longer extrapolate the past to the future. Instead, embrace the uncertainty.’ Embracing that also means scenario planning.
Van Baardwijk: ‘Translate developments into various scenarios, with different weighting: what is the probability that they will occur and what is their strategic impact? On this basis of this assessment, you determine your course.’
Eulderink adds: ‘In 1900, people had just invented flying, so in their vision of the year 2000 everything flew: everyday utensils would come flying to you. But nobody foresaw the arrival of the computer and the internet, let alone their influence on modern life. Similarly, we cannot foresee what will happen in 2100; all we can do is work with scenarios. Before you make choices on that basis, you have to ask yourself: what if we are wrong? Is it a useful lesson at a certain price, or is it a disaster? If it’s a disaster, it's better not to start. If it's just a good lesson for the organisation, the risk is manageable, and you can do it.’
Banga: ‘You can come up with various scenarios, but the key question is: how agile are you as an organisation? On the one hand, you have to be able to deal with uncertainty and respond to change promptly. On the other hand, you need to be robust: as a bank, our service must always be available, we have to keep our IT security in order, and so on. Therefore, you need to build two speeds into your organisation: an agile element, which means you can switch quickly, and a robust element, which continues to offer stability.’

3. Adapt the pace of change to the culture

Changing Leadership, therefore, means balancing between innovation and continuity. The pace of change must be carefully attuned to the nature of the organisation, as emerges from the discussion.
De Stobbeleir: ‘You can see two approaches in this. Some organisations opt for a big bang: a radical change for the entire organisation. Other organisations prefer an incremental approach, changing step by step. There is no 'one size fits all' approach; the pace must be appropriate for the organisation.’
Banga wholeheartedly agrees: ‘At Triodos, for example, we have embraced the principles of agile working practices and taken a substantial step in its implementation. In our view, a modest pilot in the corner of an organisation does not work. So we have embedded agile working practices in our culture, in line with our purpose and with an eye for the human level.’
Eulderink also takes the organisation as the starting point for the change strategy: ‘You can see Vopak as a hotel for liquids and gases. A good hotel adapts to the changing needs of its guests. So change is in our DNA, but you have to be able to keep up with the pace as an organisation. We are fortunate that part of our business is physical, not virtual. This slows down the pace of change a little so that it remains manageable. We also look very consciously at whether processes lend themselves to agile working practices, and as a company, we are very focussed on that. In our IT development and customer approach, for example, we use agile practices, but we don’t want to experiment with our safety policy; we deliberately don’t’ opt for agile working practices.’
Van Baardwijk explains that while Robeco has used agile working practices in the IT organisation for years, it has consciously opted for incremental change in business development: ‘One of our principles is cautious pioneering. Major change never starts at the core, but in the periphery, so be cautious when intervening. If you start with open-heart surgery straight away, the chances of success are small, and the results are vulnerable. So we take small steps and bundle our successes. If you then look back at your achievements, you have taken a huge step, with a sustainable result.’

4. Take people with you in the change

What does the soft side of managing change look like? How do you make people embrace change instead of resisting it? It is a question for leaders of all times. In the 21st century, however, this question takes on a new dimension because of the speed with which changes are taking place.
De Stobbeleir: ‘Leadership at the top is no longer sufficient, but must come from the whole organisation. The middle layers must also go along with the change. Middle managers must develop a vision, seize opportunities, bring their people along, and establish horizontal cooperation both inside and outside the organisation.’
Organisations have to deal with different people, who are not all equally prepared to change, says Van Baardwijk. ‘Young people often have different requirements: they have grown up with new technology and want to work in an agile way and with scrums. When these young people enter a company where senior management still works with a traditional project structure and progress is monitored linearly with spreadsheets, young talent quickly drops out. You have to avoid this mismatch by telling the less change-minded employees to adopt a different attitude and teaching the younger generation that there do have to be customers for all their golden eggs in the field of technology.’
For Eulderink it is less black and white: ‘In our company there are three groups: the people for whom technological change cannot happen fast enough, the people for whom it is all happening too fast, and the people who think the current pace is fine. As a leader, we have to take all these starting positions into account, as we also have a lot of knowledge and expertise that cannot be moulded into an app.’
Banga sees unity in diversity: ‘We also have groups of employees with different levels of willingness to change, but everyone feels equally connected to our mission. If you embed change in who you are, and in your right to exist, you can achieve a great deal of change together. A precondition for this is that you translate this into concrete terms for each employee: what does the power of change mean for their day-to-day work? Otherwise, you will lose people.’

5. Develop tomorrow's skills today

Organisations must compete increasingly for talent with the right skills and must retain their existing employees and prepare them for the future.
De Stobbeleir: ‘Knowledge and competencies are becoming more and more tenable and obsolete due to the high pace of change. It is difficult to predict which skills organisations will need tomorrow, but as a leader, you can at least make sure that people develop professionally all the time, so you are prepared for anything.’
Van Baardwijk: ‘If you want to attract talent, you need to invest a lot in it, because young people want responsibility, autonomy, and flexibility. We have special junior programmes in which young talent can grow faster, participate in job rotation, and receive frequent feedback. The hope is that this will allow them to flourish.’
Banga can see the strength of Triodos Bank's mission on the labour market: ‘People who have worked elsewhere for a while come to us as they want to make a social contribution. Everyone who works for us has made a conscious decision to do so.’ However, the focus must not solely be on attracting young talent, underline the COOs, but also on continuous development for older employees.
Eulderink: ‘You need to make careers more flexible. For example, our operators were mechanically oriented for 80 years. When we saw digitisation of their jobs coming, we supported them in their development or the reorganisation of their careers in good time. In this way, you ensure that people do not fall by the wayside.’
Van Baardwijk: ‘Older employees are great at training young talent.’
Banga: ‘You need to have some flexibility in your organisation. For example, people who have been managers can return to a specialist role, or as a cultural influencer, by supervising younger employees in this area for one day a week.’

6. Leaders must also change

Embracing disruption, digitisation, and sustainability also requires another type of leadership. It is not only organisations that need to change, but also the leadership itself.
De Stobbeleir: ‘I can see an evolution from top-down to shared leadership. Today's leaders must delegate responsibilities to teams that operate close to the market and are self-directed, multidisciplinary and diverse in composition.’ This also means that the role of the COO is evolving.
Eulderink: ‘I've never behaved like the boss who knew everything and said: this is how it should be. The job is more about orchestrating and inspiring rather than giving orders.’
Banga: ‘In recent years, my role as COO has developed into organising horizontal collaboration and delegating decision-making to the people in the organisation who have the best information available. At the same time, you have to be careful not to overload people: as a COO, you can help people focus and dose.’
Van Baardwijk: ‘IT & operations are no longer seen as a cost item, but as a driver for change. As a COO, you can add value by indicating how you should set up the organisation and invest in people and technology to be future-proof. It’s becoming an increasingly strategic role.’
Eulderink: ‘A CEO keeps an eye on all sorts of external developments. As a COO, you take a closer look to see how you can respond to them.’
Finally, De Stobbeleir poses an existential question: does leadership still have added value in a digital future, where the emphasis is increasingly shifting to self-direction? The COOs think so.
Eulderink: ‘Without a leadership structure, you are no longer agile because you keep compromising. Someone must be able to make a decision in the event of a stalemate.’
Van Baardwijk: ‘You always need leaders to make plans for the future to give direction to the self-directed teams.’
Banga: ‘In complex environments, leaders need to identify the relevant developments and connect them to the organisation. That role is becoming more and more important.’

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