The Only Way Out Is Through
Embracing the constancy of organizational change as an intellectual framework for successful business transformation
“When the going gets weird the weird turn pro.”
- Hunter S. Thompson
Art by: DALL-E 3
Change is Inevitable
Change is the Tao of the business world. It is not a fearsome, snarling apex predator so much as it is the organizing principle under which both predators and prey struggle for survival. The impersonal ebb and flow of change touches all companies. That change, manifested in variations from the almost imperceptibly subtle to the shockingly violent, produces a constant stream of winners, losers (here, here, and here) and survivors.
The nature of change may be impersonal, but reaction to change is often intensely personal, and that reaction, even more than the impact of the change itself, is a key factor in the success of organizations and their leaders over time. We tend to demonize that which we fear, and too often business leaders, sometimes in alignment with key stakeholders, and sometimes in stark opposition to them, code change as not only positive or negative but as good or evil, falsely ascribing animus where there is none.
Change is not heartless and cruel; rather it is insensate, churning, and constant. Over a sufficiently long timeline every industry will be upended, every competitive advantage will evaporate, and every organization will need to adjust accordingly. In physics as in business, the perpetual motion machine remains beyond our reach.
Leaders too often shrink from grappling with these fundamental truths and instead narrow their focus to monthly, quarterly, and annual results, with the more forward-looking minority casting their eyes on the “distant” horizon of the competitive landscape 3 to 5 years hence via a strategic planning process. This framework is the worst type of productivity hack in that it is generally helpful in the short-term while in the long-term it embeds an egregious logical fallacy (see the Turkey Problem outlined by Nassim Taleb). The truth is that, for business leaders as well as for Nassim Taleb’s poor turkey, change is coming, whether that change is currently discernable or not.
The challenge for leadership is to: 1) anticipate change regardless of the current environment, 2) confront change with the clear eyes necessary to perceive objective reality, and 3) have the courage to act accordingly.
Clear-eyed perception of an organization’s objective state is a necessary condition for a successful business transformation. Leaders must add intellectual rigor to their thinking about change and embrace the reality that business transformation is a necessary and inevitable part of the lifecycle of every organization. Clarity on this matter is essential to long-term success and value creation. Denial by leadership that an organization is in the business transformation phase of its lifecycle is extremely costly and could very well speed that organization to its demise.
Perceiving the Challenge
A business transformation is seldom simple or superficial; rather it often requires a profound alteration of culture, financial structure, leadership, operational models, processes, staffing, and systems. The greatest impediment to a timely and minimally disruptive business transformation is the human factor: leaders are often highly reluctant to acknowledge reality and as a result they defer needed organizational change until it can no longer be deferred, with the result being an unnecessary level of value destruction immediately preceding acknowledgement of the severity of the challenge(s) facing an organization and the scope of the change necessary for addressing it/them.
Anyone who has successfully climbed the greased pole of corporate accomplishment to attain a position of leadership will have amassed a dragon’s hoard of affirmations that they are special, along with a deep personal conviction that they possess the rare ability to shape events and to stare down, by force of will, challenges that would overwhelm lesser mortals. Leaders are special, and they are often fascinating, engaging people. They are also special in their capacity for self-delusion.
Too often, leaders of companies that have been dealt an unlucky hand by Fortuna allow optimism and a lifetime of achievement to obscure the magnitude of the challenges ahead. In the dark shadow of an ill-favored role of the dice, motivated reasoning causes the natural optimism and high degree of confidence present in many leaders to mutate into denial and willful ignorance.
Unable (or at least reluctant) to perceive objective reality, those in leadership positions are susceptible to severe and oftentimes fatal misjudgment of the full ramifications of change in their organizations. This susceptibility operates as a pernicious force multiplier, increasing the risk that organizations will fail to take appropriate action in the face of change until they have suffered an often-unconscionable level of value destruction.
The Scope of the Challenge
Designing, implementing, and leading a business transformation requires a highly specialized skillset, but perhaps the most valuable trait common among business transformation professionals (change management consultants, interim executives, restructuring advisors, turnaround artists, etc.) is the ability and willingness to set aside established practices and engage in a rigorous and iterative process of reimaging an organization from the bottom up. It is no small thing to redesign an organization in the midst of a crisis. Organizational complexity does not increase in a linear fashion; whereas a small organization is likely to have dozens of business processes, a mid-sized organization could easily have several hundred, and the largest organizations undoubtedly have thousands (and of course, there are many proxies for complexity aside from the number of discrete processes). A disciplined and objective assessment of an organization’s current state, with a keen eye for the wisdom and humility of Chesterton’s fence is the best approach for leader struggling to perceive objective reality.
The struggle to fully perceive, in all its implications, the challenges before them and their true scope is a real one for leaders. Many leaders have been conditioned to seek out and execute on a single, definitive answer to a challenge. However, in an increasingly complex world, this tendency is at odds with the needs of organizations that require substantial organizational change to survive. The challenges organizations face are as diverse as the set of organizations themselves, but it can fairly be stated that when a business transformation becomes necessary, the situation that gives rise to that need is likely to be a multi-faceted one.
The fear of complex, multi-faceted challenges is in some ways the fear of a challenge whose solution is beyond the abilities of incumbent leadership. This is a rational but counter-productive fear, and leaders must learn to accept the potential discomfort of objectively assessing a problem and finding that the needed organizational change is outside of their skillset. Moreover, key decision makers (capital providers, boards of directors, trusted advisors, etc.) must accept that it will sometimes fall to them to inform incumbent leaders that a change is needed to meet the present set of challenges.
Art by: DALL-E 3
Conclusion
Organizational change is a constant, and some change will be severe enough to require business transformation for an organization to survive. The challenge for leaders is two-fold. First, they must be constantly and objectively assessing the challenges facing their organization. Second, they must have the courage to acknowledge the true scope of these challenges, even if the scope of the challenge suggests that new leadership is necessary.
Existential challenges do arise, and it is often the case that the best and last service committed, professional leaders can perform in their role is to acknowledge the need to pass the torch and not deny the or downplay organizational challenges for short-sighted reasons. Denying or downplaying problems does nothing but give those problems time to grow and mutate. It is far better to start the process of addressing organizational challenges, no matter how disruptive that process may ultimately prove to be.
About the Author
David Johnson is the founder and managing partner of Abraxas Group, a boutique advisory firm focused on providing leadership and support services to companies in need of transformational change. He is an accomplished thought leader with multiple articles and speaking engagements on the topics of business transformation, change management, performance improvement, restructuring, turnaround, and value creation to his credit. David can be reached at: david@abraxasgp.com.