The world is changing at an unprecedented and ever increasing rate - what is your company doing to keep up? Open almost any business publication and you are likely to be greeted by these words, or similar. They are such a familiar part of the business lexicon that we hardly notice them.
But what do they mean? The answer is: very little. And that's the problem.
The idea that we live in a world of uniquely rapid change is a very general claim. What are we really talking about? Can it be measured? And, crucially, what are the consequences of believing this claim for business?
The belief that we live in times of unprecedented change is actually to be found in many ages. The past seems more stable than the present because it is familiar to us. But it is possible to point to any number of periods in the past when, at the time, it must have seemed as if the world was changing in unprecedented and dramatic ways: the collapse of the Roman Empire; the colonisation of the Americas; the Renaissance, the Reformation, the Enlightenment and the Industrial Revolution in Europe; and the world wars. The shift from religious to secular conceptions of the world over the past four centuries has had - and continues to have - massive ramifications throughout the world, beside which issues of recent globalisation and technical change seem less dramatic.
So there is no reason to think that the present time is one of greater change than in the past, nor that we are the first people to experience change as 'unprecedented'. Who is to say that the changes associated with the microchip are faster or more far-reaching than those associated with the printing press?
What we do know is that there is a natural human tendency to look back to the past as a golden age now lost by the travails of time. For example, it's familiar how fears about crime show a recurring pattern of beliefs that '20 years ago' we lived in a period of stability, order and morality.
In terms of business thinking, there is often a belief that there has been a fundamental move from the 'good old days' of stable bureaucracies, mass markets and organisational stasis to the new world of shifting network organisations, niche markets and constant change. The authorised version normally puts this in terms of a stable era from 1945 up until the oil crisis of 1974.
Yet one would hardly classify the post-war order as one of stability, whether economically, politically or technologically. The received wisdom of post-war stability conveniently ignores, for instance, the space race, the arms race, development of computers, the Cold War, decolonisation, the Korean and Vietnam wars, the feminist movement, major waves of immigration and emigration, major shifts in youth culture and the relations between generations. It is not clear that these constituted a 'stable environment' for business. Even the 'jewel in the crown' of the case for unprecedented change - globalisation - is less clear-cut than we often assume. Some economists have shown, by various measures, that the world economy today is actually less globalised than it was in the heyday of the late 19th-century age of European empires.
Why does any of this matter? It certainly isn't a matter of making an academic point. You may think that all this talk of long-past social and historical changes is of no relevance to hard-headed business people.
But it is exactly a story about the past having given way to a new era that is swallowed as commonsense by most business leaders and policy-makers.
In accepting it without question, businesses are placed in fear of being left behind. It is no coincidence that this fear is assiduously peddled by those who have an interest in doing so. If you are trying to sell change-management solutions, one way is to push your prospect into a corner so there is no alternative but to buy. When we accept the cliche of 'unprecedented' change without question, we are halfway into that corner.
This means most managers and leaders today have little interest in one of their core skills: the management of stability. The art of organisation is about enduring, about managing both continuity and change, and we lose the first part of this if we buy into change hysteria. We can easily get into a situation where we commit a classic error of logic: change is necessary - this is a change - therefore, this change is necessary.
The idea that any change is a good change does immense damage (see Enron, below). It leads us consistently to violate rational principles of management.
An example of such a principle is cost-benefit analysis. It is easy to be seduced by the projected benefits of organisational change, but do we ever count the costs? Indeed, can we ever count the costs, given how common it is to embark on a new round of changes before previous efforts have had time to bed in and be evaluated? And into the matrix of the costs of change, we have to add in one of the most troubling, but least quantifiable, phenomena in today's organisations: 'change fatigue'. This is now being discussed in scholarly journals and by consultants - and is familiar to many people in the workplace. Another change? More reorganisation? It saps morale faster than a sea mist rises and brings staff turnover, disillusionment and loss of commitment.
But even now that change fatigue is being recognised, most discussion is about how to combat it in the change management process. Every manager has been taught that people 'irrationally resist change' and that this has to be overcome. But it's a nonsensical idea. Imagine going to the office one morning and announcing a 10% pay rise all round. Will people resist that change? Of course not. They resist change where it threatens their interests, not just for the sake of it. What we should be asking is not how we overcome change fatigue, but how we address its root cause.
Maybe by not making that change.
You might respond that changes often have to be done for the good of the organisation, even though they threaten individual interests. Maybe - but the well-documented failure rate of change-management projects suggest that frequently they are not in the organisation's interests. Employee resistance often stems from the fact that they know more about the business than head office. Many people are motivated by wanting to do a good job, so don't assume that resistance to change is just staff protecting their turf - maybe they know more about what customers want than you do.
This point should be fairly obvious, as 'tacit knowledge' has been a buzzword of recent management thinking. This means employees know all kinds of useful things about a business but it exists only inside their heads. The trick is to turn this to business advantage by accessing it, codifying it and sharing it for the good of the organisation. That idea - organisational learning, to use the jargon - has been a powerful business tool, but why do we forget it when it comes to change? If we get into a mindset that sees resistance to change as something to be overcome, then we risk missing something valuable: the grounded, practical knowledge of our people about what the real effects of change will be. Every smart business leader knows that there can be a gap between the best-laid plans formulated in head office and reality on the ground.
Continual change does not just cause fatigue. It is also associated with other well-documented organisational problems. Because change almost inevitably breaks the 'psychological contract' with employees - the unspoken and undocumented but assumed relationship between individual and organisation - it often leads to erosion of trust. This is particularly so where change leads to a deterioration of working conditions, intensified work demands or, especially, redundancies. The latter situation tends to be the norm and it feeds 'survivor syndrome', in which those who have seen their colleagues culled are left suspicious and resentful of their employer.
Fundamentally, this should alert us to the deficiencies of viewing the human capital of organisations solely in economic terms. Never underestimate the psychological attachment of people to not just their workplace but, often more importantly, to their co-workers. Companies cannot just slice off a portion of 'human capital' and imagine the remainder will continue as before. On the contrary, such strategies breed resentment and undermine identification between employee and organisation. To give just one example, which has been well-documented in research studies, downsizing leads to 'presenteeism', where workers fabricate their presence - usually physically, but also in terms of psychological involvement - in the workplace.
Earlier, I used the word 'hysteria' in relation to change, and one of the most familiar examples of this is the dotcom boom and bust that occurred at the turn of the century. For a period, our absolute assumption in business was that we were entering an entirely new era in which traditional methods of marketing and distribution were being transformed. Sure, the internet changed and is changing things. In some industries, such as tourism, it has had a huge effect. In others, such as healthcare, it has had much less impact than expected. We haven't moved into a 'weightless economy' as the gurus predicted, but remain very much in an 'oil age', which will likely define our times as clearly as those dependent on iron, bronze, wood or coal. There have been some shifts around the edges of the world economy, but no cataclysmic transformation.
The belief in a generalised change in the economy around the internet now looks like a bad guess. The casualties of this bad guess were not so much the inflamed rash of internet start-ups as the existing 'old economy' companies, which reconfigured their future in line with the new commonsense of the information age (see Marconi, below).
But infatuation with change is not simply irrational. Businesses that don't comply with the latest trend get punished, and we have to understand what drives this compliance if we are to guard against it. I know of a CEO of a leading telecoms company who has the company share price displayed in his office, so that he always knows it. We accept it as simply commonsense that a leader needs courage to drive through change, but it also takes courage to resist the day-by-day tyranny of the share price. And that is exactly what the best business leaders do. Even when the dotcom boom collapsed, there were some companies, such as lastminute.com, that ignored transitory evaluations of their stock and won through. The markets are short-sighted, but business leaders must have the courage to take the long view.
If economics sometimes makes it difficult to resist change hysteria, so too does psychology. We have come to prize change as the hallmark of successful leadership and management. Imagine a newly appointed person at any level from CEO to team leader saying "let's continue as we are".
It's almost unthinkable, because we have come to define success in terms of change.
But a major study of managers across Europe concluded that the main driver of initiating change programmes was anxiety avoidance. So the impetus for change is often to be seen to be doing something. Yet (with considerable sectoral and global variance) middle managers are in post for an average of two years, CEOs of major companies five years. So while there is an inbuilt predisposition to initiate change, there is also little imperative to take future responsibility for it.
An important way that change is driven flows directly from the familiar technique of benchmarking, whereby organisations measure themselves against other members of, and especially leaders within, their sector. Initially, this seems sensible. On closer examination, it is a recipe for cowardice.
By benchmarking, managers immunise themselves against criticism: "I did nothing wrong, I just followed the leaders". Small wonder that bad mistakes by one company get multiplied across sectors.
More worryingly, benchmarking is done against outcomes (what leading competitors do), not against processes (what led them to that action).
This is fundamental because emulating outcomes means always comparing yourself with yesterday's solution. But emulating processes means learning from cultures that give rise to innovation. However, these cultures typically come about spontaneously and can't easily be copied, which is why the 'next big thing' always eludes those who benchmark.
In business, we often talk about the importance of thinking outside the box. But, paradoxically, while we are congratulating ourselves on thinking outside the box, often all we're really doing is thinking what everyone else is thinking because we're slaves to the conventions of our age. If we look back in time, we can see all kinds of assumptions that are now evidently wrong. Hardly anybody understood that what seemed to be the solid empires of Britain and other European powers were accidents waiting to happen; hardly anyone saw that the then-modern techniques of industry and communication would be used by totalitarian regimes to pitch the world into conflicts and tyrannies, the aftermath of which we are still enduring.
This should tell us that the things that seem most obvious, beyond question and certain are precisely the things that will prove to be the most transient.
So what things today seem most beyond question? Doubtless we could all draw up a list, but the most ubiquitous in business is that change is unprecedented and accelerating. It is so obvious as to be unworthy of comment, which means that wise business leaders will identify it as something that is very likely to be untrue.
None of this should lead us to the idea that change isn't happening.
It always has and always will. It is just a call for a more considered approach. Let's not rush blindly to change without regard for the consequences or for the particular circumstance. It's odd that 21st-century businesses have adopted so much of the mindset of 20th-century politics. They embrace revolutions, grand strategies, total transformations and are impatient with small, piecemeal reforms.
The philosopher Karl Popper railed against the Utopian social engineering of both totalitarianism and social democracy, preferring steady incremental gains based upon rational analysis. Most business leaders would accept his diagnosis of political change. It is ironic that they so comprehensively ignore it in their own organisations.
ENRON: HERD MENTALITY
Few companies espoused change as brashly as the now disgraced US energy company Enron. Fortune magazine lauded it as 'America's Most Innovative Company' for such initiatives as the online selling of power and communications commodities and related financial products, including weather derivatives (hedges against low or high-energy demand caused by changes in temperature). MBA graduates flocked to join, bringing with them state-of-the-art change techniques. Management gurus such as Tom Peters sang Enron's praises, while on the inside unfashionably conservative employees tried to resist the herd mentality that espoused change and the goal of constant 'reinvention' with an almost religious fervour.
The true state of affairs behind the hype is well known, given the fact that the company's dramatic collapse has made it one of the biggest recent cases of corporate fraud, lies and greed. Its top executives appeared in court on trial for a range of financial crimes, including bank fraud, making false statements to banks and auditors, and insider trading. During 2001, after new revelations about accounting frauds, the company's share price plummeted from $90 to 30 cents.
MARCONI: THE WRONG GUESS
In the late 1990s, Marconi was a highly successful conglomerate.
Its main strengths were in defence products and development. The legendary business figure Lord Weinstock, famous for his 'cash is king' management mantra, had steadily built the General Electric Company (GEC) by acquiring and integrating a wide range of businesses from Hotpoint and Yarrow Shipbuilders to Marconi. After 33 years of his steady hand on the tiller, the company had managed to make a profit of £981m and had a market value of £11bn. Subsequently, a new CEO, George Simpson, arrived promising to "open the windows" on the business and "jerk up" earnings. He pursued a strategy of divestment of the group's defence components and the cash released was used to make internet and telecoms acquisitions totalling more than £4bn. The strategy was described in the Financial Times at the end of 1999 as a triumph and the stock market agreed: by September 2000 shares were valued at £12.50, giving a notional value to the business of £35bn. But just a year later, following the end of the dotcom boom, the shares stood at just 29p, accorded junk status by rating agency Standard & Poor's and the company valued at just £807m. Marconi never recovered and has now been taken over.
NHS: ILL-JUDGED CHANGES
The UK's National Health Service is the largest employer in Europe. At the end of 2004 it had a staggering 1.3 million people in its pay, including some 37,726 senior managers.
In 2005 it had an annual budget of more than £90 billion. Founded in 1948, by 2005 it had been the subject of a major reorganisation on average once every six years. Since the election of the Labour government in 1997, there have been three such reorganisations, and another seven less major but still substantial reforms. The first of these major changes abolished 'fundholding' general practices (the frontline doctors who refer patients to specialists), which had budgetary control and could purchase services for their patients on an internal market. The third major change, which took place in July 2005, introduced a virtually identical system called 'practice-based commissioning'. Reviewing this third change, the Health Select Committee, which is independent of the government, concluded in its findings that "the cycle of perpetual change is ill-judged and not conducive to the successful provision and improvement of health services". However, a government proposal for another major reorganisation is currently under discussion.
TIME TO CHANGE YOUR VOCABULARY
Burning platform - This concept comes allegedly from the Piper Alpha fire in the North Sea, where a man chose to jump from the burning platform into the sea, because to do nothing is death. The passing of time has allowed change agents to repurpose this phrase and apply it to far more trivial matters.
Change agent - Anyone, anywhere who has anything to do with change, although clearly it's nice if they're driving it forward.
Change driver - Anything that drives change. Meaning anything at all.
Change master - A really, really good change agent.
White water environment - An environment that changes very quickly, like, er, white water. Apparently, all business is white water these days.
Accordian management n. Growing or shrinking a workforce quickly in response to market demand by hiring and firing, and use of short-term contracts. Seen by managers as a cost-saver - engenders disloyalty, insecurity and lost productivity.
Action list n. Manly, tough guy version of a 'to do' list.
Actionable adj. Can you do something about it in the near future? Then it's actionable. Put it in your action list.
Binge working v, n. Work pattern favoured by younger employees, those who work on projects and freelancers - frantic periods of 24/7 work followed by equally long periods of relative inactivity - or even time off in lieu.
Buy-in n. Acceptance, consensus with respect to a process, change programme, etc. Eg, 'Have we achieved customer/supplier/stakeholder buy-in'.
C-change n. Change at c-level (ie, CEO, COO, CFO, etc).
Corporate anorexia - Extreme fear of inefficiency, which leads a business to cut costs to the bone.
Crackberry - A Blackberry that is used obsessively, often in a white water environment.
Diversity fatigue n. Exhaustion brought on by the need to constantly ensure that your business is politically correct, and ethnically and socially diverse.
Drink the Kool Aid - To achieve total buy-in to company values and believe in your business no matter how wrong it seems. Eg, 'Many of Enron's middle management really drank the Kool Aid'.
Enabler/facilitator - Someone who aids the smooth functioning of a change process, though you may be unsure what they bring to the table.
Paradigm shift - Originally popularised by philosopher Thomas Kuhn to describe a completely different way of looking at the world. Now used to describe minor differences in soft drink markets. Well on its way to becoming a verb: 'How can we paradigm shift this market segment'.
Peel the onion v. to look deeper (from peeling back the layers). That if you go all the way you find nothing only improves the metaphor.
Sept 10 adj. Anything that's desperately out of date, belonging to another era.
Training tourists n. people who go on training courses to avoid work. The term tourist can refer to anyone who is somewhere for the wrong reasons.
Transition used to be a noun. Now, thanks to change, a verb. Try using it in everyday life - eg, 'Excuse me, I have to go and transition my clothes'.
Christopher Grey is professor of organisational theory at the Judge Business School, University of Cambridge, and Fellow of Wolfson College, Cambridge