January 2022 – By Greg Burns and Meredith Marshall
"We were surfing in zones we haven't surfed. . . It was only when I got in the wave that I saw the size. I was in awe." – Garrett McNamara, First 100 foot wave surfer in history
Like many of you who work with leaders and organizations, Meredith Marshall and I have been in some very insightful conversations about the massive global changes and disruptions affecting most of us both personally and professionally.
I told her a story of going to see a potential client back in 2013. He was one of the most respected senior HR leaders at Citigroup when I worked with him and was now the Chief HR Officer of another large financial services firm. Known for his wicked sense of humor, he greeted me with, “Get that smile off your face, Burns! I don’t want to hear about how great it is to be a coach or consultant!”
With a chuckle I replied, “Did you hear about the guy off the coast of Portugal who just surfed a 100-foot wave? You are the surfer! And I’m the guy who teaches you how to ride those monsters or pulls you out of the surf when you wipeout!” He laughed and we had a good chat about how crazy and complex the world was getting.
Feels Like We’re All Riding 100-foot Waves These Days
The reality is, increasingly we are all riding unprecedented waves of change. The speed, velocity, and intensity of which are only accelerating and growing more disruptive (e.g., climate change, pandemic, technology advances, societal unrest, political polarization, etc.) - and impacting both our professional and personal lives.
Anyone remember 2017? Waves of populist movements, political earthquakes, “500 year” storms, floods, and wildfires. I wrote that it would go down as one of the most disruptive years in recent history! Then 2020 arrives and with it a deadly pandemic, catapulting the world into the most globally disruptive time of our lifetime.
Everything is more connected, interconnected, and interdependent. The environment we’re operating in is radically different from what we’ve experienced before. Organizations and leaders at all levels must be ready to transform and adapt, or risk getting crushed by this “moving avalanche” of change.
More than skill building – the complexity we face will require us to adopt new mindsets and behaviors, become more collaborative and change-adaptive, and hold a wider systems-view that considers diverse perspectives and enables us to see how things are interconnected and interdependent.
Systemic Change
“Transformation is even harder than we thought”
Systemic change is perhaps the mother of all change waves. It occurs when the change permeates all or most parts of a system, thus affecting the general behavior of the entire system. Achieving this kind of long-term, transformational change – both at the scale and pace needed to meet today’s challenges - is exceptionally hard.
Twenty-five years ago, Dr. John Kotter - a thought leader on organizational change – found that an astonishingly 70% were “doomed to fail” in his landmark study on Why Transformation Efforts Fail published in Harvard Business Review (HBR).
Subsequent studies have all shown stubbornly similar results - 70% failure rate. Until, that is, a new study published in September 2021 by HBR. Somewhat deceptively titled the Secret Behind Successful Corporate Transformations, their analysis measured a 78% failure rate!
Anatomy of a Successful Transformation
At GBA, we know how arduous the transformation journey can be. We’ve been doing this work for over a decade, with over 50 companies and more than 20 industries worldwide. We’ve learned a lot about the complexity of change and have gleaned unique insights on what successful transformations get right.
Transformational, systemic change doesn’t happen overnight. At its core, it’s about changing people: their mindsets, behaviors, and way of doing things. It’s critical to set expectations upfront. The change journey usually takes a considerable amount of time. Clients need to understand the difficulty of this work and the commitment necessary to be successful.
We’d like to share a success story - a recent culture transformation at a Fortune 50 financial institution. We’ll bring you along on our journey and share a few practical tips to increase buy-in, capture value, and sustain momentum.
Our client was the Enterprise Risk (ER) division of a large and systemically important financial institution whose purpose was ensuring the company operated in a safe and sound manner. The firm was in the final stages of a large-scale, multiyear change effort that shifted the tactical day-to-day risk management activities to the business lines and reshaping ER’s role into an oversight function. To be an effective independent oversight function, the Chief Risk Officer (CRO) saw a critical need to transform the division, redefine the operating model and build different organizational capacities.
INSIGHT 1: UNDERSTAND THE COMPLEXITY OF THE SYSTEM
Organizations are highly entangled systems. Meaning the norms and behaviors present in one part of the system will influence those in another – even if there is significant geographic dispersion between them.
Too many transformation efforts fail to acknowledge the complexities of the broader system and how the parts are interconnected. This leaves serious gaps in understanding what needs to change and why.
Our ER client was a small, complex system nested within a larger, more complex “organizational” system, nested within an even larger, highly complex “financial” system. While they understood the complexity of their work, they didn’t understand the complexity of their system.
To understand those internal and external dynamics that were influencing the system, we needed to build a bigger perspective. This involved actively engaging a wide range of diverse views and voices that helped us see what was really going on in the system and what needed to change. Developing this insight early on enabled us to zero in on the right areas, the right issues, and the right challenges.
INSIGHT 2: UNDERSTAND THE CULTURE AND ITS ORGANIZATIONAL DNA
To understand complexity, we must also understand culture. Culture is set of core behaviors and patterns within an organization that influence how things get done and why they get done in a certain way. Commonly misunderstood and frequently overlooked, culture is at the heart of every transformation effort.
A separate but closely connected layer of culture is “organizational DNA.” First introduced back in the early 2000s by Booz Allen (now PwC), it speaks to the “personality and performance” of an organization.
In an article on The 10 Principles of Organizational DNA, authors Jaime Estupiñán and Gary Neilson expand on the metaphor and describe the key principles and formal (structure, decision-making, motivators, and information) and informal (norms, commitments, mindsets and networks) elements.
With our ER client, we started by educating the executive leadership team on how we leverage culture and organizational DNA to transform. We held interactive workshops with senior leaders to examine the current culture, challenges and stakeholder needs to begin envisioning the desired future state. This proved to be a highly valuable exercise that gave leaders the mental model needed to take the next step and provide early insights into critical gaps and an outline of our transformation vision.
INSIGHT 3: GET BOTH INTERNAL AND EXTERNAL PERSPECTIVES ON CHANGE
Most efforts aren’t thinking deeply enough about their stakeholders’ needs. This is one of the most painful, yet avoidable mistakes and shortcuts here will give an incomplete diagnosis of what needs to change and create rework later.
To gain an external perspective, we conducted confidential interviews with over 30 leaders who regularly interacted with the risk division, including board members, regulators, senior executives, and business line heads and posed a series of “key stakeholder questions.”
We aggregated the feedback and shared it with the CRO and his leadership team to provide the wider system-level view needed to describe the current and future state in very tangible, concise behavioral statements.
We also engaged the next two levels of management within ER to validate and further refine. Engaging different external and internal stakeholder groups on the front-end was critical to the overall success of the transformation. It also provided them a seat at the table and increased their buy-in and support.
ER KEY STAKEHOLDER QUESTIONS
This exercise helped ER better understand the needs of their stakeholders, highlight tension points and complexities within the system and provide a clear vision of what success would look like. We called this the “Blueprint for Success” (BFS) and it defined the core success factors and critical supporting behaviors we could use to both communicate the future state vision and provide a baseline for measuring progress.
Designing a Successful Intervention
As Garrett McNamara says, “It’s not how big the wave is, it’s how you ride it.” In designing a strategy for systemic change, we believe that giving comprehensive focus to these three critical areas upfront will help avoid catastrophic wipeouts and increase your chances for success.
- Build a bigger perspective and deeper understanding of the system with a healthy respect for complexity
- Educate your client about culture and use it as a catapult to examine the current behaviors, key challenges, stakeholder needs and what the future state should look like
- Actively engage your internal and external stakeholders to understand their needs and their view on what needs to change
In our next segment, we’ll get into the nuts and bolts of how we developed a very holistic, high impact and sustainable transformation. A teaser alert: we called the program The Power of Partnerships.
For a confidential discussion about your transformation needs, please contact us at the address below or click the Contact Us button below.
G Burns & Associates | 40 Ingram Street | Forest Hills, NY 11375