Change Management - A Macro and Micro Economic View

Change Management – A niche solution sold by consulting companies, with the broad strokes of “Organizational (meaning global) impact, but localized to a part of a business, that eventually delivers/creates a micro-economic impact, rather than the promised macro-economic (and behavioral) impact.

This is not a sarcastic view on change management, but the common frustration shared by many organizations, and often at the end of a rather energy sapping intervention, often left picking up the scrapes of some change, mostly to justify the cost. Else, in the very nature of change, once something/an Organization changes, it cannot revert back to ‘normal’, that easy and that fast!

As I ponder on the reasons for such a gap between the expectation and the final result, I have come to the conclusion that the problem lies in the variables considered, and defined for measurement of outcome; most often a highly localised micro economic view, and not the macro economic view of the same.

All the effort of consulting has been put in the development and refinement of the execution processes of change management, and very little thought on the actual variables that need to be impacted.

Going back to the basics – the roots of change management originated from the early 60’s on the diffusion of innovations.

“Rogers proposes that four main elements influence the spread of a new idea: the innovation itself, communication channels, time, and a social system. This process relies heavily on human capital. The innovation must be widely adopted in order to self-sustain. Within the rate of adoption, there is a point at which an innovation reaches critical mass” (reference)

Before we dwell into the nuts & bolts of the variables needed for an impactful change management – let’s draw our attention to the cornerstone / or the Achilles heel of Change Management - Heavy dependence on Human Capital.

Any change management that ignores the importance of this Human Capital, or is designed to circumvent this Human Capital, or does not eventually draw a profit out of this Human Capital, is at best, an injection of enthusiasm into an organization, but not Change Management.

A brief look at the elements that influence change:

Innovation – Innovation needs to address at least one macro-economic indicator in the organisation. (One can argue, Macro Economic Indicators are for a country, not an organization or a business) – While this is true in the classic definition – I wold define that the innovation needs to impact a variable that can be measure at the Organizational level. Example: Overall time to deliver at the Organisation level has changed by x%, Net Cost of Operations at the Organization has changed, Net Revenue per employee has increased etc. 

The problem is that, for most innovative solutions that are driven as part of change management – the measures are at a project / group or at best a business unit level, and they do not roll up to a measurable impact on the organization.

I am saying that, unless you really don’t have an audacious macro-economic variable to impact while ‘innovating’, you would really not create a change. 

This might be a better example in a government led changes – A macro-economic change to make 50% of all transactions electronic in a year – Now imagine what kind of innovation comes into play, versus – lets digitize one department.  

Adopters – It cannot be taken for granted, that great innovation automatically inspires adopters (or the Organization to adopt). For true innovation to get accelerated, one needs to create a catalyst (virus) team, to embrace the proposed innovation. Most organizations have a strong (rigid) pyramid structure. Even if you call your organization flat in hierarchy, the decision making and influencing remains with a few and get steeper in proportion to the ‘value’ of the decision – ergo – Pyramid structure. 

The challenge is that success of adoption really lies with the bottom of the pyramid, and mostly brimming with Gen Z or Millennials, and the thrust remains the middle layer (unfortunately). 

The key to an impact at a Macro level will only be possible when this bottom half of the pyramid become the adopters. Else (as seen numerous times) – the impact remains at a micro level, as you are choosing the wrong adopters.

And, don’t forget – Gen Z and Millennials come with the expectation of instant gratification – and when instant gratification is met – everything they touch becomes viral. You want a viral change on the organisation – enable innovation, that impacts macro level, but can give instant gratification to the adopters – In short words – Make them the real heroes of change management. 

Communication channels – Two functions that need to stay away from communication on anything to do with Change Management – Human Resources, and Quality Teams. This is a dangerous statement to make – but the way most organizations are structured, and operate – these functions have eroded their value share (both in terms of mind space, and impact), and Gen Z and Millennials almost come with a preconceived notion that anything from HR or Quality is passé and redundant. 

Gen Z and Millennials communicate very differently and view impact and progress very differently, and unfortunately HR & Quality systems have not kept pace and are stuck in a very number and % based model. 

The currency that sells is of impact, personal gain, visibility and bragging rights of being part of a huge impact in an organization. The best way to both engage and create the most efficient communication channels is through the same Gen Z and Millennial groups. May be a ‘tinder for change’, a ‘snapchat for innovation’, ‘Instagram for reporting change’ etc.

Time – A change management program should really be a long one – 2 Years, 3 Years, 5 years. This almost sounds like sacrilege. Is not the very purpose of change management to get a quick change and a quick return on the buck? – Well that is right if you want a micro impact (which is usually the case).

At a Macro level – the Goal of Change Management should be – In 2 years, our average revenue per employee should double, or we have to be the top 3 players in the market. Now that is a goal!, and this journey can encompass many small phases. 

Change should be measure both at a micro level (to adjust the innovation, and channel effective communication), and at a Macro level, that you are truly transforming – Yes that is the work. Change management applied over time is and should mean “Transformation”. Curtail the time – transformation will be cut short!!

Social system: The biggest blind spots in any good change management, especially if you want to engage at a Macro Level – a good view of the changing Social Systems. Make a detailed map of first internal systems that can throttle the adoption, employee reactions, impact on morale etc., and the external changes with respect to competition, new ideas, media, financial performance etc.

How many times a good change gets wiped out because internal systems have not kept pace with the change!!

I end on this note – True Change Management has to not only change the way an organization operates, but the impact leak beyond the organization into the overall business space it operates in!