Why Do Change Agents Often Fail?

As the recovery begins to take shape, CEOs are increasingly optimistic and forward thinking.  As new initiatives are unleashed, it’s very tempting to want to bring in someone who will “shake things up” or be a catalyst for change.  It’s also very risky.  Studies show that up to 70% of change initiatives fail. 

So why does change take so long to unfold and why do so many change agents fail?  Because as researcher Jeremy Dean writes in Psyblog,  it’s hard to influence a group as a new person.   In fact, a recent research study showed that change agents “commonly face increased negativity and outright rejection” from groups they are attempting to change, no matter how diplomatically they introduce their ideas.   The research shows that jumping in and trying to make a splash with new ideas is a very poor strategy.

“Groups are hostile to criticism from newcomers and are likely to resist, dismiss or ignore it”  … until the newcomer first proves their loyalty to the group.

 Jeremy outlines the 10 Rules That Govern Groups.  Among the rules are these:

•  Group norms are very powerful, changing behavior in unexpected ways, and breeding conformity.
• People who do not “learn the ropes” are ostracized.
• Leaders gain trust by first conforming to group norms, and then introducing change that others would willingly follow.

That sounds pretty slow to me.  But if that approach is too slow, and jumping in with new ideas is even less effective, then what is a clever change agent to do?

If you are trying to change group behavior, research on the Neuroscience of Leadership suggests than instead of simply transmitting your own ideas to your employees, a far more effective approach is to focus team members on the desired results and then getting the team to focus on their own insights how to achieve the goals.  As author David Rock and Research Psychiatrist Jeffrey Schwartz recently wrote:

“Attention continually reshapes the patterns of the brain … People who practice a specialty every day literally think differently, through different sets of connections, than do people who don’t practice the specialty. In business, professionals in different functions — finance, operations, legal, research and development, marketing, design, and human resources — have physiological differences that prevent them from seeing the world the same way.”

That’s right.  Research shows that concentrating attention on a mental experience, over time, literally creates physical changes in brain structure. 

Therefore, an effective leader will concentrate attention using a solution-focused approach, introducing questions to help teams focus on identifying and creating new behaviors.  Over time, the continual focus on new ways of thinking will create an environment where people have their own insights, and with a bit of positive reinforcement, these insights will change not only how people think short term, but will also create lasting changes in their perceptions. 

Literally rewiring the brains of your team.  Powerful stuff – that’s clearly a power to be used for good or for evil.

Never Doubt Your Ability to Change the World

I am inspired by people who take on the impossible. It’s why we love to serve entrepreneurs and nonprofit leaders.   I’d like to tell you about one of our clients today.

Anthropologist Margaret Mead once said:

“Never doubt that a small group of thoughtful, committed citizens can change the world.  Indeed, it is the only thing that ever has.”

In 1983, a report called “A Nation at Risk” warned about the “rising tide of mediocrity” in American education.  Yet there remains a huge achievement gap between the US and other countries.   It’s not only a moral outrage, it’s economically disastrous.  A recent McKinsey study just calculated the cost of that failure.  The lost productivity costs the American economy trillions of dollars every year.  Trillions of dollars in GDP is an incomprehensibly large amount of wasted human potential.. and a bigger moral outrage.

In 1998 a group of thoughtful, committed citizens decided to do something about public education.  And they weren’t going to tinker around the edges, or start with something easy.  They were going to solve the toughest, hardest, most unfair part of it – they wanted public education to work for everyone. Everyone.

So they opened the nation’s first urban, public, college preparatory boarding school.  Their innovative model combined a rigorous academic program with a nurturing boarding program that teaches life skills while providing a safe and secure environment for the students.  The SEED schools provide disadvantaged, at-risk students a pathway to success in college and beyond.  They do not select their students – it’s open to everyone. 

So how did that audacious experiment in public education work out?

This week President Obama came to the SEED School of Washington to sign the National Service Act.    You can read more on the White House blog, but in his remarks, the President said:  “This school is a true success story, a place where for four of the last five years, every graduate from the SEED School was admitted to college. Every graduate.”

So, like I said, never doubt your ability to change the world.

What is The Value of a College Degree?

When I meet with a client to discuss a new search, I ask a million questions.  “What does success in this job look like a year from today?”  “How will you measure it?”  “What are the toughest challenges the new person will face on the job?”  “What will they need to be really good at, to drive results?”  And on and on.  My goal is to get an “action hero” movie playing in my head, starring … the person we need to go recruit.   But somewhere toward the end of the conversation I also look for strikeout factors – things the client would never consider in a candidate. 

And often clients rule out people who have not earned a 4 year college degree.  

In fact, this table of unemployment rates, shows the huge disparity in unemployment rates between high school grads and college grads.  And the recession is just widening the gap.

At the risk of appearing to be an idiot, I often ask clients why they want a degree.  The answers can be really fascinating.  Because a degree is usually a proxy for something else – like “polish” or great communication skills or the ability to follow-through on a difficult task over several years.   Yet we all know college grads who lack all those attributes, and many people without a degree who have all those attributes in spades.  So personally, I’d rather go look for those attributes specifically, and skip the whole “degree as proxy for something else” conversation. 

But it’s not as simple as that.

While some people don’t learn from any experience, I think a 4 year degree can provide a unique learning experience that is critical to success in many “knowledge worker” jobs.  A 4 year degree often exposes you to people who did not grow up in your hometown. People who do not share your values.  People who may challenge your thinking in areas you never really thought about before.  A good curriculum would ideally expose you to courses in a variety of disciplines you never had to think about before.  Ideally you get out of your comfort zone and begin to think about a wide range of issues - and learn to examine problems from a variety of perspectives. 

In college you have a unique opportunity to not just acquire knowledge, but to learn new ways of thinking -  and this is directly relevant to thriving in today’s turbulent environment.  Business guru Jim Collins says turbulence is the new normal - today’s business challenges will test your assumptions, challenge your thinking and demand innovative solutions. And few things can prepare you for that like a good college education.

I’m not saying college is for everyone, and I recognize that for many people it is simply financially unattainable.  But what I am saying is this:  while some people don’t learn from any experience, nobody can learn from an experience they never had.

So how are you learning how to thrive in turbulence?

Inspiration for Innovation

Alongside the steady drumbeat of bad news, there has also been renaissance of articles to inspire the leaders of small organizations.  Here are a few of the most relevant:   

Peter Bregman says small companies have a huge advantage in this economy.  Not just a competitive advantage, but an advantage in being able to fully engage their employees and build trust with their customers.

“We simply don’t trust companies anymore. We trust people. And in big companies, it’s hard to even find a person to trust as we scream “operator” into our telephones only to get transferred to another menu whose options have changed.”

 John Baldoni says you can Frame This Crisis to Your Advantage.

“Crises provoke disruption. Savvy executives can use them to their advantage to effect change within the organization. The challenge is to frame the crisis as an opportunity, not simply for the executive but for the organization as a whole. In fact, with the organization in flux now is the time for those in the middle, or even on the front lines, to rise up and prove their mettle. . . . Stasis is the enemy of progress. Since crises upset the status quo, there can be opportunities to develop newer and more resilient organizations. There is another benefit to crises as well — working toward change takes employees’ minds off the uncertain future.”

In another article, John Baldoni argued that GM CEO Rick Wagoner failed to lead in 3 key ways.  He did not shake up the go-along-get-along-status quo culture, he did not demand tough solutions, and he did not act with urgency.

Rosabeth Moss Kanter argues Why Rick Wagoner Had to Go.   He was an incrementalist, when GM need transformational leadership to survive.

“Even when executives who presided over a period of decline admit mistakes, it is nearly impossible for them to stir up the organizational energy needed for a turnaround. Those failed leaders symbolize the weight of past losses. People tend to interpret their actions as self-justifying, chosen to rewrite past history. After all, if the old CEO had wrong ideas in the past, why should people believe he or she has the right idea now? For GM’s Wagoner, as the problems got worse, the loss figures got bigger, and little else appeared to change, his credibility slipped into the negative zone too.”

With all this talk of innovation, how do you know if your leadership team is ready to innovate?

The Leadership Acid Test

By now, every sentient CEO knows this is the time for bold action, for innovation, for challenging old assumptions and demonstrating leadership.  While many CEOs relish that challenge, few small businesses actually have the kind of management team that can really support innovation. 

Innovation simply demands a very different kind of leadership than the ”caretaker” leaders found in many smaller organizations. So how do you know if your team is up to the challenge?   Don’t listen to what they say – everybody is talking the innovation game now.   As my old boss, Steve Ettridge used to say… “turn off the sound and look at the picture.”

Here is my leadership acid test:  Is your management team taking bold, innovative action in the face of the economic downturn?  Are they measuring performance, holding each other accountable, and humbly adjusting course as they find (and tell you about) mistakes?

Or are they blaming circumstances, battling internally, and jockeying for position?  Look at your grapevine, are rumors increasing?   Are people knocking on your door to ask about their careers?  Do you feel like you are choking on increased gossip, fear, blame and paralysis?

Let’s be honest, nobody knows exactly what to do right now.  Nobody has perfect information.  But by now, most organizations are mobilized and taking action.   Some will succeed, many will fail.  

I see organizations sorting themselves into two tribes.  The first tribe is the cohesive, well managed innovators.  They are cutting fat carefully, and directing time and money into the future initiatives with the most promise.

The second tribe is the circular firing squad.  Slashing the good right along with the bad, at war internally, and they will probably not survive the downturn to emerge as a viable entity.

Here are the signs of a cohesive, innovative leadership team:

• Your team regularly challenges your thinking, makes you a bit uncomfortable, tests your assumptions and suggests new ways of looking at old problems. When you share a new idea, it is greeted with enthusiasm and “Hey, that could work if…”  instead of “That will never work, I don’t have time, or I don’t have a budget for that” or worse, people SAY they will take action, but do not.
• Your management team has specific, measurable, metrics to monitor their results and each individual on their team knows exactly what is expected of them.  People “own” their mistakes and failures and team help each other but also hold each other accountable for results.  Information is shared, everyone knows what is going on – even bad news is shared openly.
• You see an increased cohesion in the team – pulling together, and setting aside petty grievances, celebrating small victories.
• You are frequently surprised to hear of their decisions and results – they did not talk about doing it, they just quietly set about doing it.

And here are the symptoms of a circular-firing-squad leadership team:

• Your managers do not have firsthand knowledge of the issues your customers are experiencing. 
• Your managers come up with ”ideas” but rarely prioritize and take committed action on the few things that really matter.  Everyone is an expert in what won’t work, but nobody sticks their neck out for an idea that might work.  Meetings are unproductive talk-fests.
• Your managers are surprised by fairly predictable external events and worse, did not have a contingency plan for dealing with those surprises.  (Hope is not a strategy)   Communication is often poor and decisions made hastily.  Externally their actions look erratic, irrational and unfair. 
• Your managers do not have a firm grasp of the metrics that predict future performance.   They do not have “trigger points” identified to take action.  (“If sales fall below X we need to layoff 3 people”)
• Problems land on your desk without any hard analysis or suggested action plans.  People whine about problems without taking ownership for getting results despite the obstacles.  You feel like you need to make too many decisions “below your pay grade.”
• Most telling – you feel like you cannot trust their judgment.

If you have the circular-firing-sqaud team, you need to admit that you hired most of these people, and you let their performance deteriorate into what you have right now.  Now all you have is false promises, delay, failure, excuses, blame, and really poor information to make critical decisions. 

Instead of having a team who can innovate their way out of the downturn, all you can do is pray for the end - you cannnot outperform the market – in fact you will probably be viewed as a meal ticket by your better organized competitors.

Why Innovation Matters

Do more with less – recessionary words to live by.  Of course, that’s nothing new for small and midsize organizations.  When times are good, costs tend to creep up a bit, in lean times you cut back a bit.   So what is the smart money doing right now?  The really smart organizations are cutting costs through innovation, and not simply cutting costs.  And while those phrases may sound similar, they are the difference between lightning and lightning bug. 

I work with a lot of entrepreneurs, so you might notice that I reference innovation frequently in my posts.  So what are some innovative ways to cut costs?   For one, I’m seeing a renewed interest in outsourced services as companies work to turn fixed costs into variable costs.   Where it once made sense to hire an IT manager to support your growing staff, it might make more sense now to outsource IT support to an external vendor.  Where you once might hire an HR Manager, today you consider outsourcing HR instead.  Companies everywhere are reexamining old assumptions, revisiting old ways of doing things – open to new ideas.  They are innovating.

Business to Business (B2B) purchasers “want it fast, right, cheap and easy” (which is on the path toward the mantra of our age – “perfect, free and now”).  Innovation expert Stephen Shapiro calls this the Innovation Bell Curve.  Value Brands with good quality are displacing mid-market brands. 

In recessions, lower cost competitors often earn greater profits.  Wal-mart grows, but luxury brands are hurting – even discounter Target is taking a hit as consumers pull back on unnecessary spending.    McDonalds is doing just fine as people trade down from more expensive restaurants.  Wal-mart and McDonalds are not slashing costs and staff to survive, they are already designed to make a profit at a lower price point.

To speak from my own experience, Staffing Advisors is an innovative low cost alternative to traditional search firms – the Southwest Airlines of Staffing – we are built to make a profit at about a third the cost of a traditional search firm.  Consequently we are very busy right now, as busy as we were last year.   Similar to Southwest, our competitive advantage is “fast, right, cheap and easy.”   Even in a downturn there is still an enormous need for third party recruiters  – staffing is a multibillion dollar industry.

By innovating – literally inventing a new way to deliver search services – we have been able to keep costs low, serving clients who want an alternative to using a full-fee agency (and today that’s almost everyone) but more importantly, we are also able to serve companies who would never consider using a full-fee search firm – a massive and untapped market for search services.    In fact, more than half of our clients have never used a full-fee search firm, even in good times.

Our more expensive competitors  – because they did not innovate  - cannot compete in our markets and cannot cut their prices to our levels and still survive – their process is simply not designed to work that way.  

So yeah, innovation matters.  As Steve Shapiro says:  

“Exercise grows muscle while burning fat.  Innovation is exercise for business.  It helps grow the organization while also enabling cost efficiencies.”

So tell me, what are you doing in your job and in your organization to innovate your way out of this recession?

Small and Midsize Employers Lead Innovation, and the Recovery

The secret of great entrepreneurs is “Smarts Guts and Luck” according to a recent article by venture capitalist Tony Tjan.  As he puts it, his “central philosophy” is that “human capital trumps everything else . . .  it is all about the people, and we would take a B business plan with an A team over an A plan with a B team any day.”

In a recent survey by Intuit, 9 of 10 small business owners see opportunities for their business despite the recession.   In the “Future of Small Business Report” the authors note that “With no large corporate fortress separating them from the marketplace . . . small businesses rely on an almost instinctive muscle memory approach toward innovation to survive and thrive.”  As business guru Peter Drucker puts it:

“Innovation is the specific tool of entrepreneurs, the means by which they exploit change as an opportunity for a different business or a different service.” 

The Boston Globe ran an article entitled “Innovation may fuel economic recovery.”   They quoted George Colony, the CEO of Forrester Research as saying “It’s obvious that the new economy – whatever we’re going to emerge into – is going to be built by the innovation that will emerge during this recession.” 

In a recent survey, the Boston Consulting Group ranked the US second among large large countries for manufacturing innovation (and 8th overall). 

Unfortunately I find that most small businesses are chronically underserved when it comes to recruiting people who can drive innovation and results.   For this reason, I’ve written extensively on the need for search firms to innovate.   In a post on “The Outlook for Recruiting” on  ERE, Raghave Singh reached a similar conclusion.

 ”…much of the growth in jobs is expected to occur in small and medium-size businesses that have no need or cannot support full-time recruiters. An increase in needs for sourcing, as opposed to full-service recruiting, will occur as employers seek to minimize costs.”

While I agree with many of Mr. Singh’s points, I disagree that growing enterprises will have to settle for less than “full service” recruiting.  I’m convinced that search firms will either learn how to meet client needs at a price they can afford, or they will cease to exist.   

One thing is certain about innovation -  after the recovery, the world will look different.   So what are you doing right now to make it different?

How to Hire People Who Thrive in Downturns

Have you noticed that some of your employees are less productive, just when you need them most?  Some people are frozen in place from fear, while others are innovating, trying new things and challenging the status quo.  Harvard Business Review posted an article on the need for flexible, positive leadership, quoting futurist Alvin Toffler.   

 ”The illiterate of the twenty-first century will not be those who cannot read and write, but those who cannot learn, unlearn and relearn.” 

The path forward is not clear.  We need innovation to survive and thrive.  And innovation demands that we all develop our patience and persistence, while our leaders must demonstrate optimism and enthusiasm. This is the time to step up and take risks, making plenty of mistakes along the way. 

If your key people do not have the skills to thrive in this market, it might be trade-in time. In an earlier post, I mentioned how to hire for resilience - and patience, persistence, optimism and enthusiasm are essential to resilience.   I’ve heard it said that you can’t trust someone who has not failed at something, learned and bounced back.

Look around you, do you see resilience and indomitable spirit or just people trying to look good by avoiding mistakes and placing blame on external factors?

Built to Solve Yesterday’s Problem

I was meeting yesterday with Jeff Cheng, the founder of GURU.  He’s the guy who keeps our information technology running at peak efficiency – freeing us to do our jobs.  (He’s good, you can read my testimonial here.)  

Anyway, Jeff was saying that several years ago he had the technology to deliver great IT support remotely, with less client face time, but his clients weren’t going for it.   They kept paying a premium for face time.   Now, of course, his clients are rapidly adopting the less expensive (and better) managed services solution as a way to save some money.   And we all know, they will never go back.   They just had to be in a money-saving mood to start paying attention.  (This is why recessions spur innovation).

Jeff was asking me why more search firms haven’t made similar innovations to cut costs and improve service.   He said there is a huge market of CEO’s he knows who need staffing help from time to time, but are unwilling to pay 20-30% of annual salary to get it.   (I like the sound of that).

It seems like every time I talk with a new client they are surprised by our speed, predictability, and low price compared to traditional search firms.  They ask how we do it, they try it,  love it, and then ask me why other search firms haven’t adopted our commonsense approaches to reducing costs and improving speed.  

I think the answer is that most search firms are still built to solve yesterday’s problem, using yesterday’s technology. 

Yesterday’s problem,  yesterday’s technology:

Search firms are, for the most part, still built to solve the candidate outreach problem using the phone.  Cold calling  is where the costs are, and it is what most people associate with using a search firm - because it’s what they pitch.  Think about it, have you ever heard the phrase “We have access to candidates you could never find on your own”  or “We reach passive candidates, who don’t post their resume or answer ads” or “I have a golden rolodex of people I know in the industry – I know who the good ones are and who the bad ones are.”    (I bet you receive a few voicemails like these every day.)

Recessions Spur Innovation

Adversity often brings out the best in people.  Our current recession holds the potential for sparking both innovation and collective action for social change.  Many people do not realize that the Great Depression sparked enormous management innovation (see  ”Recession: The Mother of Invention?”). 

Many successful organizations started during an economic slump. Why?   Market upheavals provide rich opportunities for innovation.   Wary buyers begin looking for more cost-effective ways to meet their needs so new business models gain traction in the market.  (For that very reason, I’ve argued that search firms must innovate their way out of this recession).

Some people say a lack of venture capital money is really not a constraint to innovation.  Tim O’Reilly in an article in Forbes, sees it this way “many of the great waves of creative destruction . . . didn’t even start with the profit motive.  Rather they started with interesting problems and people who wanted to solve them . . . because exploring new ideas was fun.”   He suggests that venture capital follows innovation, not the other way around.  “The people inventing the future are doing so just because it’s fun.”

In this economy, fear of change might be the biggest danger facing your business.  So, here’s the question: are you innovating?   Are your employees showing resilience and really swinging for the fences, or just playing it safe?

Search Firms Must Innovate, But Will They?

This is my third recession in the staffing business, and this one is different.  The search business has arrived at what Andy Grove would call a  ”strategic inflection point” – where the fundamentals of its’ business are about to change.   Costs simply must come down, way down.  I saw alot of search firm repositioning in the last recession – mostly tinkering with their pricing models, but not fundamentally changing  who they hire and how they deliver services. 

The largest search firms got crushed in the last recession – some laying off 40% of their staff.  Of course they got into trouble because they gorged on the dot com bubble.  But they learned their lesson, right?  Wrong.   Good times returned and then they used the same inefficient business model to gorge on the financial services bubble and surprise!  now they are now laying off again.  Note to my investment advisor:  The next time any major national search firm earns a third of their revenue from any business sector…that’s the very definition of a bubble – a whole business sector not paying enough attention to costs.

Now the blogosphere is lit up with comments about “disruptive innovation” in the recruiting world.  Most of the comments are about technology and social media, but the same market forces apply to search firms.  One of the most thoughtful is David Manaster’s ERE post – (R)evolution.  In another must-read article, John Sumser bluntly counsels that HR “should be hammering its vendors for cost reductions.  Get the same for less money.”  John refers to a brilliant article in The Economist about the flip-side of Moore’s Law:

“Suddenly there is more interest in products that…provide a particular level of performance at an ever-lower price.”

Here is the problem.