Shownotes
Kristy Ellmer and Julia Dhar, co-authors of How Change Really Works and founders of BCG’s Behavioral Science Lab, explain why so many transformations fail and what the science says separates success from failure. They break down the “messy middle,” why people resist being changed rather than change itself, and how giving employees real agency turns resistance into momentum.
What You’ll Learn:
Why “false alignment” among leaders, not resistance from employees, derails most transformations before they start.
Why giving employees real ownership, not just participation, turns resistance into momentum.
What makes AI transformations distinct from other kinds of organizational change
Learn More:
Read How Change Really Works: https://on.bcg.com/3SpBPzd
Your AI Change Is Actually a People Change: https://on.bcg.com/3RKUp4J
The False Alignment Trap: https://on.bcg.com/45R9ULH
CEOs Are Betting Big on AI Transformations. Science Is How They Win: https://on.bcg.com/4bGy1jG
We Found the Real Reason 70% of Transformations Fail: https://on.bcg.com/4xqmOMq
Chapters
(0:00) What Is Transformation?
(1:54) Why Leaders Need a New Playbook for Change
(3:42) Where Do Most Transformations Fail?
(5:37) What Does the “Messy Middle” Look Like?
(6:28) What Makes AI Transformations Different?
(9:25) Where Is the "End Point" in an AI Transformation?
(11:51) Why “Just Get on the Bus” Isn’t Good Advice for AI Change
(13:03) When to Walk Away from a Change Effort
(15:42) What Should Leaders Do When Momentum Fades?
(16:49) Why Giving Employees Ownership Matters
(21:06) What Should Leaders Do in the “Messy Middle”?
(22:37) How Do You Make Change Successful?
Meet the Experts
Kristy Ellmer: https://on.bcg.com/4xvpgBg
Co-Author, How Change Really Works
BCG Managing Director & Partner
North American Leader, BCG’s Transform Practice
Co-Founder, BCG’s Behavioral Science Lab:
Julia Dhar: https://on.bcg.com/45ec8Vj
Co-Author, How Change Really Works
BCG Managing Director & Partner
North American Leader, People and Organization Practice
Co-Founder, BCG’s Behavioral Science Lab: https://on.bcg.com/4z9WhVs
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Transcripts
- One of the biggest
myths out there is
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that people just
don't like to change.
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In fact, people are quite
positive about change.
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They know that to
improve is to change.
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What they don't like
is being changed.
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- The organizations that will
define the next decade won't
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simply be the smartest
organizations.
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They'll be the ones that
are the most adaptable.
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And adaptability is
something that we can learn,
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and you can build it
into the system
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that actually creates
the conditions
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where people are ready,
willing, and able--
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and even excited--
to change.
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- Welcome to
"The So What from BCG,"
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the podcast looking at the
ideas shaping business,
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the economy, and society.
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I'm Georgie Frost.
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AI is transforming the
way businesses operate,
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and CEOs are under enormous
pressure to make sure
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their organizations
don't get left behind.
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But history suggests
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that most large-scale
transformations fail.
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So how can businesses
stay focused
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and get to the finish line?
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Joining me today is
Kristy Ellmer,
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North American leader of
BCG's Transformation practice,
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and Julia Dhar,
North American leader
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of People and
Organizational practice.
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Together, they're the founders
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of BCG's Behavioral Science Lab
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and co-authors of
the bestselling new book
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"How Change Really Works:
Seven Science-Based Principles
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for Transforming Your Organization."
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Kristy, Julia, welcome.
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Before we talk about
how change really works,
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let's define,
if you wouldn't mind,
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what we actually mean
when we talk about change
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and transformations
in a business context.
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- We think about transformation
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as in any deliberate effort
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to shift how people do,
get something done together.
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So that can be an AI rollout.
It can be a merger.
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It can be a change in
the customer service.
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The transformation isn't about
changing just the strategy.
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It's actually about changing
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how people show up
on Tuesday morning.
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So think about it as,
are people coming
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and acting differently
six months from now
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in the way that
they do the work
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and the way that
they're operating?
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- Julia, why write
a book about change?
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- There are any number
of books about change.
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We've spilled a lot of words
over the last half century
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about our disappointment
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with the rates of success
in organizational change.
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I frankly think we're not
scandalized enough about
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how frequently change is not
successful in organizations.
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But there were two reasons, really.
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Number one is it is not that
change fails all the time.
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There are successes,
and they're not random.
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They leave clues.
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And we wanted to
systematically put
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those clues together into
a useful body of knowledge
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for our practitioners,
for CEOs,
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for chief transformation officers,
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just for someone trying
to make a positive change
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at their company or
in their community.
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The second is that we have
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an incredibly helpful
body of knowledge,
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in fact, bodies of knowledge,
from the behavioral sciences--
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psychology, economics,
neuroscience,
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customer research--
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about human beings,
about how we change,
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what are the circumstances
under which we predictably
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and sustainably can make
a shift in our behavior.
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20 years ago, a really
treasured friend, colleague,
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mentor, hero of ours, Jeanie Duck,
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wrote a book called "The Change Monster,"
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which gave concepts to what I think a lot
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of people were feeling about
the difficulty of change.
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One of the neatest things
about the last two decades
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about building behavioral
science at BCG has been
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that so many of the
concepts, the propositions
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in Jeanie's book now have science
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that did not exist at the time
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to back them up
and to affirm them.
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- Julia, can you go
into more detail for me
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about why and where
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so many transformations
fall down?
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- I think a number-one error
that we make upfront is
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having false alignment
rather than true agreement--
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not devoting sufficient
time to say,
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do we have the same set
of objectives and intentions
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and measures of success
for the transformation
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among a relatively small
group of executives?
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This is really simple.
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This is like the cheapest
behavioral science hack
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of all time.
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If you're embarking
on this journey,
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if you're midway
through the journey,
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get that group
of people together.
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Give them each a piece
of paper and a pen--
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they can share a pen
if budgets are tight--
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and write down what are the
goals of this transformation
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and how will we know if
we have achieved them.
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You'll be surprised
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by how often you get
wildly different answers.
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The second, in the middle,
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what Kristy always talks
about as the messy middle,
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is assuming that change
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in behavior, commitment, energy
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will just come by default,
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that it will emerge
naturally and spontaneously
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rather than being
something that we plan for.
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It won't. Of course it won't.
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And, and then the third is
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actually sustaining that momentum
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over a really long period of time--
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one of these consistent themes
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from even very tenured executives.
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One of my favorite CEOs,
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who I admire a lot,
said the other day,
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"You know, I'm on my third
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like really significant
transformation
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and turnaround at
my third company.
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And I had forgotten how
difficult it would be.
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I'd forgotten how hard it is
to do something like this.
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I always just thought it
would be a little bit easier."
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Planning for that idea
that there are periods
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where it will be difficult
and boring and painful
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to move through the journey
is really critical.
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- Kristy, the messy middle?
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- The messy middle. The messy
middle isn't dramatic.
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It's actually quite quiet.
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And this is the thing
that leaders need
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to be paying attention for.
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This is when you're in the
middle of the transformation
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and maybe some things are going on track,
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some things are maybe off track,
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but you've been
at it for a while.
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Meetings become updates
instead of decision meetings.
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Initiatives maybe
slip by two weeks.
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Maybe then it's
a couple of months.
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And you start to hear a
lot of reporting increases
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but actually a lot less discussion
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and problem-solving
and challenging it.
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And that is when the, the
leaders should start to worry.
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If you think about momentum,
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momentum isn't something
that disappears overnight.
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It actually leaks.
And in the messy middle,
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that is where the
momentum is leaking.
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And your job as a leader
is actually to say,
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how do I create and maintain that momentum
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throughout the
transformation?
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Because that is where
transformations go
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to live and die.
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- Julia, you mentioned about
your favorite CEO going
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through three transformations.
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- I don't have a favorite
CEO, Georgie.
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- Oh, sorry. One of.
Forgive me.
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- You know, that'd be like having
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a favorite family member.
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- Yeah, sorry. No biases here, of course.
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- I do, I do deeply
admire this one.
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- You mentioned a CEO
who you admire greatly.
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Can I say greatly as well?
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- Certainly you may.
- Excellent stuff.
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You mentioned, Julia,
you mentioned a CEO
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that you admire greatly.
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They've gone through
three transformations.
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I'm just wondering how
similar transformations are
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depending on, I suppose,
what you're transforming.
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And, and with that, AI is of course going
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to be on many CEOs' agendas.
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How fundamentally different
would that transformation be
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from other kinds
of transformation?
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- I think human beings are
beautiful and unique.
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Thank goodness they are
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because this is why I have a job.
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Transformations are equally
beautiful and unique.
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And I say a little bit
of that in jest
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because of course there are ways
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in which human beings
are very similar.
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There are ways
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in which organizations
are very similar.
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This is why benchmarks
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and best practices are
somewhat useful.
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But acknowledging and taking
time to learn about the ways
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in which an organization
is beautiful and unique,
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the beliefs that
people have about it,
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the beliefs that they have
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about the things that
will be difficult or easy
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inside their organization
are really important.
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And I think that's a really
important gesture of respect
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and empathy for
anyone who is trying
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to make change happen
is to understand
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where are people
actually beginning?
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Because it will reveal to
you something really obvious,
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which is that everyone is always starting
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from a, quite a different
starting point than you.
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What's distinct and different
about AI? Probably two things.
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Number one, I think, is
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the degree and
intensity of change.
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I don't think it's
hyperbole to say
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this is highly,
highly likely to be
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the single most disruptive
change that anyone
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of the five generations
currently in the workforce are
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likely to see in
their working career.
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Number two is the way
in which it challenges
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or forces people to
confront their identity.
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So very often in any type of
organizational transformation,
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people are asking,
will I have a job?
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What will I be doing?
Who will I be doing it with?
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One of the things
that is different
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in some AI transformations
is people are asking,
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"If I don't write software code, who am I;
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what is valuable
about being a person
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in this organization?"
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at the same time
as they are asking,
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"What should I advise
my child to do;
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do I think my spouse
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or significant other
will have a job?"
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And so the complexity and
intensity of the emotions
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that people will have
around that are likely
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to be more significant
than in other situations.
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- But with something like AI--
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and I feel we're in quite
a nascent period here--
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00:09:30,625 --> 00:09:32,750
what does the end
point look like?
229
00:09:33,625 --> 00:09:36,375
Do we know? And does that
make it more complicated?
230
00:09:36,375 --> 00:09:38,208
- No, I, I don't
think we know.
231
00:09:38,208 --> 00:09:40,375
And I think what we're
working through right now is
232
00:09:40,375 --> 00:09:42,958
actually understanding what
does the change look like
233
00:09:42,958 --> 00:09:45,583
and how can we think about
it in sort of chapters.
234
00:09:45,583 --> 00:09:46,958
And I think one
of the elements
235
00:09:46,958 --> 00:09:48,375
that we talk about
in the book
236
00:09:48,375 --> 00:09:50,375
that was really
important to us is
237
00:09:50,375 --> 00:09:52,291
this idea of endings.
238
00:09:52,291 --> 00:09:55,250
And the important reason
it matters so much is
239
00:09:55,250 --> 00:09:57,625
because humans need endings.
240
00:09:57,625 --> 00:09:59,291
And so one of the
things we recognize
241
00:09:59,291 --> 00:10:01,125
and we hear from a lot
of our organizations
242
00:10:01,125 --> 00:10:03,750
that we work with is "my
people are tired," right?
243
00:10:03,750 --> 00:10:05,208
The organization is fatigued,
244
00:10:05,208 --> 00:10:08,250
and now you're throwing
all of this AI change in.
245
00:10:08,250 --> 00:10:10,458
And so how can we
actually get people to
246
00:10:10,458 --> 00:10:13,250
improve their ability to
sort of take on change?
247
00:10:13,250 --> 00:10:14,916
And one of the things
that we found is
248
00:10:14,916 --> 00:10:17,958
companies just keep adding
on to levels of change.
249
00:10:17,958 --> 00:10:19,833
And I think about it
now that we are actually
250
00:10:19,833 --> 00:10:20,666
in a change economy,
251
00:10:20,666 --> 00:10:23,458
meaning we need to constantly be changing.
252
00:10:23,458 --> 00:10:26,583
But that doesn't mean that
you can't construct endings
253
00:10:26,583 --> 00:10:29,625
with natural periods to
actually help people see
254
00:10:29,625 --> 00:10:31,541
the start and the
end of something
255
00:10:31,541 --> 00:10:34,583
which is actually going to
improve their confidence
256
00:10:34,583 --> 00:10:36,000
and, therefore,
their cognitive load
257
00:10:36,000 --> 00:10:37,958
to take on the next change.
258
00:10:37,958 --> 00:10:41,041
You know, I think, in the AI
age that we're in right now,
259
00:10:41,041 --> 00:10:44,250
we can draw some inspiration
particularly as well
260
00:10:44,250 --> 00:10:47,208
as we think about how to
make AI more successful
261
00:10:47,208 --> 00:10:49,041
from a story that we
tell in the book.
262
00:10:49,041 --> 00:10:51,791
One of the things that
happened during World War II is
263
00:10:51,791 --> 00:10:54,666
there was, the US pilots were
having a lot of accidents,
264
00:10:54,666 --> 00:10:56,625
and they couldn't figure out why.
265
00:10:56,625 --> 00:10:59,708
And interestingly enough,
the, the government went
266
00:10:59,708 --> 00:11:03,125
and hired someone called Paul
Fitts, who was a psychologist.
267
00:11:03,125 --> 00:11:05,625
And what they found
was it was actually
268
00:11:05,625 --> 00:11:08,625
the, the cockpit design
of the airplane
269
00:11:08,625 --> 00:11:10,875
that was creating
all the mistakes.
270
00:11:10,875 --> 00:11:12,916
There weren't natural
human ways in sort of
271
00:11:12,916 --> 00:11:15,500
how they would use different
parts in the cockpit.
272
00:11:15,500 --> 00:11:17,750
Think of all the buttons
in different places.
273
00:11:17,750 --> 00:11:19,583
And so he actually redesigned the cockpit.
274
00:11:19,583 --> 00:11:22,250
And immediately what they
found was an increase in sort
275
00:11:22,250 --> 00:11:24,666
of performance from the pilots.
276
00:11:24,666 --> 00:11:26,000
And so if we think
about that story
277
00:11:26,000 --> 00:11:28,125
and we put AI into it,
right now we're sort
278
00:11:28,125 --> 00:11:31,458
of giving people a tool and
we're saying, use AI, right?
279
00:11:31,458 --> 00:11:33,208
Use it into your workflow.
280
00:11:33,208 --> 00:11:35,583
And what people are doing
is sort of small changes.
281
00:11:35,583 --> 00:11:37,208
They're sort of playing with it.
282
00:11:37,208 --> 00:11:38,500
We actually need to think about
283
00:11:38,500 --> 00:11:42,333
how do we redesign sort
of the cockpit with AI
284
00:11:42,333 --> 00:11:44,375
so that people can
engage in it differently.
285
00:11:44,375 --> 00:11:45,583
And when you start to do that,
286
00:11:45,583 --> 00:11:49,250
you'll actually get people
more engaged in the process
287
00:11:49,250 --> 00:11:51,708
versus just giving them the tool.
288
00:11:51,708 --> 00:11:52,666
- Julia?
289
00:11:52,666 --> 00:11:57,666
- If your assumption is that
a car is just a faster horse,
290
00:11:57,708 --> 00:12:02,708
you miss a lot of the chances
to think about the driver.
291
00:12:03,625 --> 00:12:07,125
We've spent a lot of
the last two years
292
00:12:07,125 --> 00:12:09,291
hearing from senior
leaders, telling people
293
00:12:09,291 --> 00:12:12,958
to get on the bus
when it comes to AI.
294
00:12:12,958 --> 00:12:16,125
And I increasingly think that
isn't very helpful advice.
295
00:12:16,125 --> 00:12:18,750
Number one, because
people already know it.
296
00:12:18,750 --> 00:12:23,208
Our research suggests that
close to 90% of employees know
297
00:12:23,208 --> 00:12:25,375
that they will need significant
298
00:12:25,375 --> 00:12:27,875
and substantial
retraining, reskilling
299
00:12:27,875 --> 00:12:30,333
to stay competitive in
their job, at their company,
300
00:12:30,333 --> 00:12:32,750
in the economy overall.
301
00:12:32,750 --> 00:12:33,875
But the thing that
really bends me
302
00:12:33,875 --> 00:12:36,083
out of shape about it is
303
00:12:36,083 --> 00:12:39,500
the thing about buses is they
usually have a large sign
304
00:12:39,500 --> 00:12:42,083
on the front that tells you
where the bus is going.
305
00:12:42,083 --> 00:12:44,875
They have predictable
and planned routes
306
00:12:44,875 --> 00:12:48,833
and stops along the way that
tell people what to expect.
307
00:12:48,833 --> 00:12:52,250
So I'd love us to spend
the next six months,
308
00:12:52,250 --> 00:12:54,875
the next 12 months being a
little bit more introspective
309
00:12:54,875 --> 00:12:58,041
among leadership teams
and asking,
310
00:12:58,041 --> 00:13:01,166
how well have we told people
where the bus is going
311
00:13:01,166 --> 00:13:03,291
and what to expect
along the journey?
312
00:13:04,250 --> 00:13:07,500
- How do you know when,
313
00:13:07,500 --> 00:13:09,791
I mean, to use
your bus analogy,
314
00:13:09,791 --> 00:13:12,208
when the bus is going
in the wrong direction
315
00:13:12,208 --> 00:13:15,000
and actually is probably best
316
00:13:15,000 --> 00:13:16,375
just to get off
and start again?
317
00:13:16,375 --> 00:13:19,708
- Organizations are full
of feelings and facts.
318
00:13:20,750 --> 00:13:23,583
Feelings are even more
important than facts,
319
00:13:23,583 --> 00:13:26,250
but a feeling is not
the same as a fact.
320
00:13:26,250 --> 00:13:29,750
So number one, if
you're an executive,
321
00:13:29,750 --> 00:13:31,000
if you're leading a change
322
00:13:31,000 --> 00:13:34,291
and you start to
have a feeling
323
00:13:34,291 --> 00:13:37,250
that the energy is
coming out of it,
324
00:13:37,250 --> 00:13:39,666
the success,
attention, focus is
325
00:13:39,666 --> 00:13:41,750
perhaps not what you
remembered, rightly or not,
326
00:13:41,750 --> 00:13:43,750
not what you remembered
at the beginning
327
00:13:43,750 --> 00:13:45,625
or not what you expected,
328
00:13:46,458 --> 00:13:49,333
first, that's just a feeling.
Let's get some facts.
329
00:13:49,333 --> 00:13:51,833
A good set of facts would be,
330
00:13:51,833 --> 00:13:54,666
how are we doing versus
our original objective?
331
00:13:54,666 --> 00:13:57,583
An equally useful set
of facts would be,
332
00:13:57,583 --> 00:13:59,791
how do other people feel?
333
00:13:59,791 --> 00:14:02,791
What measures of the emotion
and commitment do we have
334
00:14:02,791 --> 00:14:04,708
from other people
in the organization
335
00:14:04,708 --> 00:14:07,875
who we are expecting
to change?
336
00:14:07,875 --> 00:14:10,333
Do they believe that
we will be successful?
337
00:14:10,333 --> 00:14:13,083
How are they feeling about it?
338
00:14:13,083 --> 00:14:14,208
And let's say, Georgie,
339
00:14:14,208 --> 00:14:17,666
that your original diagnosis
is totally correct--
340
00:14:17,666 --> 00:14:22,458
that this effort appears
to have fizzled out,
341
00:14:22,458 --> 00:14:24,625
that none of the
things that we hoped
342
00:14:24,625 --> 00:14:26,875
that people would do
have happened,
343
00:14:26,875 --> 00:14:30,166
that none of the tools
we built are being used.
344
00:14:31,875 --> 00:14:34,250
We kind of have two choices at that point.
345
00:14:34,250 --> 00:14:37,666
One is you can look for
somewhere to put that blame,
346
00:14:37,666 --> 00:14:40,083
and very often you'll end up
with narratives like, well,
347
00:14:40,083 --> 00:14:43,458
people are not very engaged
or not very motivated
348
00:14:43,458 --> 00:14:45,583
or they're not
very appreciative
349
00:14:45,583 --> 00:14:47,875
of all the hard work
that has happened.
350
00:14:47,875 --> 00:14:49,875
But the alternative--
shout out
351
00:14:49,875 --> 00:14:54,541
to Katy Milkman, a phenomenal
professor at Wharton--is
352
00:14:54,541 --> 00:14:56,750
to induce a fresh start,
to just say,
353
00:14:56,750 --> 00:14:59,958
sometimes it is not that
we need to begin again,
354
00:14:59,958 --> 00:15:03,750
but let's just declare a moment
355
00:15:03,750 --> 00:15:06,625
where we can re-begin.
356
00:15:06,625 --> 00:15:09,583
And one of the things that
Professor Milkman has found is
357
00:15:09,583 --> 00:15:11,625
that, you know, we're much
more likely to be successful
358
00:15:11,625 --> 00:15:15,750
in making a change at emotionally
significant milestones
359
00:15:15,750 --> 00:15:18,500
like the 1st of January,
360
00:15:18,500 --> 00:15:23,125
your birthday, a Monday,
the start of a month.
361
00:15:23,125 --> 00:15:24,958
The thing that I love
about this research is,
362
00:15:24,958 --> 00:15:26,708
as it has continued
to progress,
363
00:15:26,708 --> 00:15:30,250
is just declaring
a fresh start can be
364
00:15:30,250 --> 00:15:32,333
psychologically
incredibly powerful.
365
00:15:32,333 --> 00:15:36,458
And number two, using that
mechanism of a fresh start
366
00:15:36,458 --> 00:15:38,041
is not an admission of defeat.
367
00:15:38,041 --> 00:15:42,416
It's sort of how you refocus
everyone to be successful.
368
00:15:42,416 --> 00:15:44,291
- Kristy, what's your view?
369
00:15:44,291 --> 00:15:45,625
- I think about momentum
370
00:15:45,625 --> 00:15:47,958
as something that's actually
a management system.
371
00:15:47,958 --> 00:15:50,416
So how do I feel ownership
of creating that?
372
00:15:50,416 --> 00:15:52,416
How do I create
more recognition
373
00:15:52,416 --> 00:15:54,833
in the organization
to create some momentum,
374
00:15:54,833 --> 00:15:56,750
even if we're
starting to leak it?
375
00:15:56,750 --> 00:15:58,791
If I think about how do
I take the initiatives
376
00:15:58,791 --> 00:16:01,083
and maybe break them
down into smaller pieces,
377
00:16:01,083 --> 00:16:03,375
so I can start to show some
more wins on the board?
378
00:16:03,375 --> 00:16:04,208
You know, it's similar
379
00:16:04,208 --> 00:16:06,208
to when you're doing any sort of activity
380
00:16:06,208 --> 00:16:08,000
like long-distance
running or something
381
00:16:08,000 --> 00:16:10,833
and that idea of people
feeling like they're winning
382
00:16:10,833 --> 00:16:13,041
is actually going to create that momentum.
383
00:16:13,041 --> 00:16:15,625
- If you are only going
to remember one thing,
384
00:16:15,625 --> 00:16:16,666
I think it would be
385
00:16:16,666 --> 00:16:21,125
that all of us are
addicted to progress.
386
00:16:21,125 --> 00:16:25,166
And like the dopamine hit
on progress is so high.
387
00:16:25,166 --> 00:16:28,416
And being able to
give that to someone
388
00:16:28,416 --> 00:16:29,458
by creating a structure
389
00:16:29,458 --> 00:16:32,125
in which they will
have made progress,
390
00:16:32,125 --> 00:16:33,500
they get to see that progress,
391
00:16:33,500 --> 00:16:36,791
you can make it visible
to other people
392
00:16:36,791 --> 00:16:41,000
and to themselves
is a free gift
393
00:16:41,000 --> 00:16:45,083
to people doing the hard
work in the organization
394
00:16:45,083 --> 00:16:47,166
and, by the way, is going to end up being
395
00:16:47,166 --> 00:16:49,083
a free gift to
the shareholders.
396
00:16:49,083 --> 00:16:53,041
- I want to dig into
why it matters so much
397
00:16:53,041 --> 00:16:56,916
to give people ownership in
successful transformations.
398
00:16:56,916 --> 00:16:58,708
Why is that so key?
399
00:16:58,708 --> 00:17:00,250
- I think one of the
elements we like
400
00:17:00,250 --> 00:17:02,000
to actually use
the word is agency
401
00:17:02,000 --> 00:17:04,916
and that idea of I
actually feel some agency
402
00:17:04,916 --> 00:17:07,541
and that I'm in control a little bit more.
403
00:17:07,541 --> 00:17:09,041
And as you think
about an organization,
404
00:17:09,041 --> 00:17:10,958
depending on the size and
scope of your transformation,
405
00:17:10,958 --> 00:17:12,583
you might have
thousands of people
406
00:17:12,583 --> 00:17:14,791
that are actually being
affected by the change.
407
00:17:14,791 --> 00:17:16,041
And so the idea is,
408
00:17:16,041 --> 00:17:19,041
how do you actually create
agency across that?
409
00:17:19,041 --> 00:17:20,916
One of the things that
we saw in the science was
410
00:17:20,916 --> 00:17:22,625
something called
the IKEA effect.
411
00:17:22,625 --> 00:17:24,375
And basically what
it came down to is
412
00:17:24,375 --> 00:17:26,333
a, a study that was done
413
00:17:26,333 --> 00:17:29,500
that actually had people
build IKEA furniture
414
00:17:29,500 --> 00:17:32,041
and had others sort of
purchase IKEA furniture.
415
00:17:32,041 --> 00:17:35,041
The people that built the
IKEA furniture actually saw
416
00:17:35,041 --> 00:17:38,208
a 63% increase in
their perceived value
417
00:17:38,208 --> 00:17:39,833
of that IKEA furniture.
418
00:17:39,833 --> 00:17:42,041
You know, Julia often
likes to say it like this,
419
00:17:42,041 --> 00:17:44,833
that people don't burn down
houses that they build.
420
00:17:44,833 --> 00:17:47,500
We actually spend a lot of
time designing a system
421
00:17:47,500 --> 00:17:48,875
in a transformation
422
00:17:48,875 --> 00:17:51,500
that actually says we're
creating that agency.
423
00:17:51,500 --> 00:17:53,291
We're getting more than
just participation.
424
00:17:53,291 --> 00:17:56,250
We're allowing people to
sort of make micro decisions
425
00:17:56,250 --> 00:17:58,916
or be part of influencing
communities or groups
426
00:17:58,916 --> 00:18:02,250
that are working teams
where they have more say.
427
00:18:02,250 --> 00:18:04,750
And the more you do that,
you create that more ownership
428
00:18:04,750 --> 00:18:06,500
in the transformation,
and all of a sudden,
429
00:18:06,500 --> 00:18:08,791
it's not 10 people rowing
in the boat, right?
430
00:18:08,791 --> 00:18:11,291
It's hundreds, if not
thousands, all rowing
431
00:18:11,291 --> 00:18:12,500
and rowing in
the same direction
432
00:18:12,500 --> 00:18:13,958
because they believe in it.
433
00:18:13,958 --> 00:18:15,083
- Julia, what's your take?
434
00:18:15,083 --> 00:18:17,166
- All of the hyperscalers,
435
00:18:17,166 --> 00:18:19,541
all of the model companies
are talking now
436
00:18:19,541 --> 00:18:23,166
about human agency, which
is so encouraging to me
437
00:18:23,166 --> 00:18:26,166
because two years ago, when we decided
438
00:18:26,166 --> 00:18:28,458
to devote a whole chapter to it,
439
00:18:28,458 --> 00:18:30,500
no one was talking about it.
440
00:18:30,500 --> 00:18:33,833
And for us, it was a direct
response to, I think,
441
00:18:33,833 --> 00:18:38,166
some really dangerous cliches
in organizational change.
442
00:18:38,166 --> 00:18:42,708
Things like "we need to
bring people along" made
443
00:18:42,708 --> 00:18:45,625
my own mental image of
like dragging people
444
00:18:45,625 --> 00:18:48,125
into something which, by
the way, sounds terrible
445
00:18:48,125 --> 00:18:50,958
for both parties involved.
446
00:18:50,958 --> 00:18:54,625
We just need to get
people excited.
447
00:18:54,625 --> 00:18:58,208
Well, I think the worst
thing that you can do
448
00:18:58,208 --> 00:19:00,666
in almost any situation
is tell people
449
00:19:00,666 --> 00:19:04,416
how you think they should
feel about something.
450
00:19:04,416 --> 00:19:08,625
So telling people that you,
you need them to get excited,
451
00:19:08,625 --> 00:19:11,458
I think, is a bit like telling
people not to get defensive.
452
00:19:11,458 --> 00:19:14,625
It's going to produce
the exact opposite result
453
00:19:14,625 --> 00:19:15,875
that you hope.
454
00:19:15,875 --> 00:19:19,875
Or when you say, we need,
455
00:19:19,875 --> 00:19:24,875
generically, some change
champions in the organization,
456
00:19:25,166 --> 00:19:30,041
well, if they don't have any
ability to act with agency,
457
00:19:30,041 --> 00:19:33,541
to honestly raise issues and resolve them,
458
00:19:33,541 --> 00:19:36,708
then they just become
propagandists for the state.
459
00:19:36,708 --> 00:19:38,500
None of that is useful.
460
00:19:38,500 --> 00:19:42,791
What is unbelievably
useful, especially when
461
00:19:42,791 --> 00:19:46,791
there will never be enough
time or money or attention
462
00:19:46,791 --> 00:19:51,250
to do all the things that
we want to do in a company,
463
00:19:51,250 --> 00:19:56,208
maximizing the ability for
people to make choices,
464
00:19:56,208 --> 00:20:01,208
take action, see the impact
of those, have agency
465
00:20:01,625 --> 00:20:04,875
gives you the chance
to multiply the results
466
00:20:04,875 --> 00:20:07,041
of what you are going to do.
467
00:20:07,041 --> 00:20:12,041
A COO, who I also
very deeply admire,
468
00:20:12,041 --> 00:20:15,333
was once rolling out a big change program
469
00:20:15,333 --> 00:20:17,375
across a complicated site
470
00:20:17,375 --> 00:20:22,208
and a very like diverse and diffuse site.
471
00:20:22,208 --> 00:20:23,833
And I said, "How's it,
472
00:20:23,833 --> 00:20:27,000
how's it going to work
after we train people,
473
00:20:27,000 --> 00:20:28,958
and how are we going to make
sure that they do it?"
474
00:20:28,958 --> 00:20:31,083
Because they have
a lot of independence,
475
00:20:31,083 --> 00:20:32,791
a fair bit of autonomy in
how they do their work,
476
00:20:32,791 --> 00:20:34,125
but in a very complicated,
477
00:20:34,125 --> 00:20:35,666
very safety-conscious environment.
478
00:20:35,666 --> 00:20:38,916
And the COO said,
479
00:20:38,916 --> 00:20:41,333
"Oh, I mean, I will
stand in the control room
480
00:20:41,333 --> 00:20:45,250
over their shoulder and
make sure that they do it."
481
00:20:45,250 --> 00:20:47,333
And I said,
"Yeah, I hear you.
482
00:20:47,333 --> 00:20:51,125
Solid plan until the point
at which you have to go
483
00:20:51,125 --> 00:20:53,666
to the restroom or get a coffee,
484
00:20:53,666 --> 00:20:56,375
and then the whole change
agenda falls apart."
485
00:20:56,375 --> 00:21:00,750
And so getting the
human at the center,
486
00:21:00,750 --> 00:21:02,833
the human who you
have to invite
487
00:21:02,833 --> 00:21:05,416
and encourage to change,
makes all the difference.
488
00:21:05,416 --> 00:21:06,750
- Okay, Kristy, so no standing
489
00:21:06,750 --> 00:21:08,500
over people's shoulders,
490
00:21:08,500 --> 00:21:10,375
but what are the three things
491
00:21:10,375 --> 00:21:13,708
that you think every CEO
or every leader should do
492
00:21:13,708 --> 00:21:15,375
to improve their chances
493
00:21:15,375 --> 00:21:17,583
of making it to the finishing line,
494
00:21:17,583 --> 00:21:19,958
getting through that messy middle?
495
00:21:19,958 --> 00:21:24,208
- So first thing is that idea
of I am creating a change,
496
00:21:24,208 --> 00:21:26,333
and it is a product and
a service that I need,
497
00:21:26,333 --> 00:21:28,291
I need my employees to buy into.
498
00:21:28,291 --> 00:21:30,208
And my job is to create a system
499
00:21:30,208 --> 00:21:34,166
that makes it easy for them
to change and to buy in.
500
00:21:34,166 --> 00:21:36,250
So number one is the mindset.
501
00:21:36,250 --> 00:21:38,166
The second is designing a program
502
00:21:38,166 --> 00:21:40,166
that makes it very easy for people
503
00:21:40,166 --> 00:21:42,375
to have agency and participate in.
504
00:21:42,375 --> 00:21:44,708
So too often in
transformations, we like to look
505
00:21:44,708 --> 00:21:47,041
at things at sort of
that 30,000-foot level,
506
00:21:47,041 --> 00:21:48,750
sort of the investor view
if you will, right?
507
00:21:48,750 --> 00:21:50,416
This is the, the five pillars
508
00:21:50,416 --> 00:21:51,750
and how we're going to
drive transformation.
509
00:21:51,750 --> 00:21:52,833
These are the five KPIs
510
00:21:52,833 --> 00:21:54,333
that are going to, we're going to measure.
511
00:21:54,333 --> 00:21:55,916
Here's the EBITDA impact.
512
00:21:55,916 --> 00:21:56,750
And understanding that
513
00:21:56,750 --> 00:21:59,875
as we think about how does that translate
514
00:21:59,875 --> 00:22:01,750
to the employees actually doing the work,
515
00:22:01,750 --> 00:22:03,458
we need to really break it down
516
00:22:03,458 --> 00:22:05,791
into small, manageable pieces.
517
00:22:05,791 --> 00:22:08,250
So really as they're
designing a transformation
518
00:22:08,250 --> 00:22:11,291
with their leadership team,
are they designing it in a way
519
00:22:11,291 --> 00:22:13,375
that actually is about how
the employees are going
520
00:22:13,375 --> 00:22:16,666
to engage in it versus how
they want to engage in it?
521
00:22:16,666 --> 00:22:17,500
And then the third is,
522
00:22:17,500 --> 00:22:19,750
as they think about kicking
off a transformation,
523
00:22:19,750 --> 00:22:21,125
they're going to
spend a lot of time
524
00:22:21,125 --> 00:22:24,000
getting ready, preparing,
building that excitement,
525
00:22:24,000 --> 00:22:26,416
and then, as soon as it gets
out into the organization,
526
00:22:26,416 --> 00:22:28,916
you see leaders kind of
scale back a little bit.
527
00:22:28,916 --> 00:22:30,916
The reality is they
actually need to dial in
528
00:22:30,916 --> 00:22:34,791
and actually make more time
for change and progress
529
00:22:34,791 --> 00:22:36,791
and really actually
build a plan around it.
530
00:22:36,791 --> 00:22:40,833
- Okay. We've covered the so
what. Now it's the now what.
531
00:22:40,833 --> 00:22:45,750
What are the next immediate
steps leaders should take?
532
00:22:45,750 --> 00:22:47,041
Julia?
533
00:22:47,041 --> 00:22:51,125
- Number one, make clear
534
00:22:51,125 --> 00:22:53,083
and specific requests.
535
00:22:53,083 --> 00:22:56,125
This works in your personal
life as well, by the way.
536
00:22:56,125 --> 00:23:00,791
But precise expectations
are a game changer.
537
00:23:00,791 --> 00:23:05,791
The second is, where you have
a change that is struggling,
538
00:23:06,291 --> 00:23:09,083
ask yourself earnestly, honestly,
539
00:23:09,083 --> 00:23:11,625
sincerely, empathetically,
540
00:23:11,625 --> 00:23:13,541
why would anyone do this?
541
00:23:14,958 --> 00:23:18,250
Is it likely that they'll
be able to make this change?
542
00:23:18,250 --> 00:23:20,166
And if your answer to why
would anyone do this is
543
00:23:20,166 --> 00:23:24,250
because I told them to, that's
none likely to be sufficient.
544
00:23:24,250 --> 00:23:29,250
And the third is make
progress visible and positive.
545
00:23:29,791 --> 00:23:34,791
We cannot overpraise
successful progress
546
00:23:35,750 --> 00:23:39,083
and consistently
seeing the behaviors
547
00:23:39,083 --> 00:23:42,750
that we would like to have
more of in the organization.
548
00:23:42,750 --> 00:23:44,666
- Kristy?
549
00:23:44,666 --> 00:23:46,375
- I think leaders sometimes think
550
00:23:46,375 --> 00:23:49,250
successful transformation
requires extraordinary people.
551
00:23:49,250 --> 00:23:50,416
And I don't think it does.
552
00:23:50,416 --> 00:23:52,541
It actually requires
ordinary people working
553
00:23:52,541 --> 00:23:54,333
in systems that help them succeed
554
00:23:54,333 --> 00:23:56,083
in the change that we're trying to drive.
555
00:23:56,083 --> 00:23:58,833
And have you built a
system and a way of working
556
00:23:58,833 --> 00:24:01,791
that is actually allowing
people that you have today
557
00:24:01,791 --> 00:24:04,791
to be better and to change
and do things differently?
558
00:24:04,791 --> 00:24:06,916
Because what we see with
successful transformation is
559
00:24:06,916 --> 00:24:08,791
it's not rare nor mysterious.
560
00:24:08,791 --> 00:24:10,458
It's knowable, it's repeatable,
561
00:24:10,458 --> 00:24:13,166
and it's really baited based
in that sort of science
562
00:24:13,166 --> 00:24:15,333
of how humans change.
563
00:24:15,333 --> 00:24:18,500
- Fabulous. Kristy, Julia,
thank you so much.
564
00:24:18,500 --> 00:24:20,083
And thank you for joining us.
565
00:24:20,083 --> 00:24:21,000
If you'd like to get your hands
566
00:24:21,000 --> 00:24:22,541
on Kristy and Julia's book,
567
00:24:22,541 --> 00:24:25,833
"How Change Really Works:
Seven Science-Based Principles
568
00:24:25,833 --> 00:24:27,625
for Transforming Your Organization,"
569
00:24:27,625 --> 00:24:29,500
you can find the link
in the show notes.
