A thought on prioritising effort alongside other standard business metrics.
In the 1995 publication by John Kotter entitled “Leading Change: Why Transformation Efforts Fail”*, his research from over 10 years showed that only 30% of change programmemes are successful. Almost 2 decades later, McKinsey research found that the figure was still around 30%.**
Kotter found that unsuccessful change management usually failed during at least one of the following eight phases:
- Establishing a sense of urgency
- Creating the guiding coalition
- Developing a change vision
- Communicating the vision for buy-in
- Empowering broad-based action
- Generating short-term wins
- Never letting up
- Incorporating changes into culture
Despite this insightful summary of where failure happens, I think there is another dimension at play. McKinsey’s view is that the “Missing Management Metric” is the assessment of organisational health in relation to certain elements of “management practice needed to improve performance”.
Notably their assessment of performance is determined ultimately in financial terms, as seen from their “five-step process that prioritises management practices needed to improve performance” and as they say, “doing more doesn’t add much value and involves disproportionate, not to mention wasted, effort.”
From observation across all industry verticals, I’ve realised that Kotter’s eight phases are consistently and exclusively viewed through a lens of financial priority.
There is one condition the common mindset depends on: the absolute requirement of a defined outcome with a financial target attached. This condition is valid in times that are stable and predictable, but bearing in mind the combination of macroeconomic crises, slowing consumption and globalisation, alongside the increasing capability and affordability of technology, empowered citizens and democratised value chains; the current and future business environment is anything but stable and predictable.
Rather than defining an end result before the journey starts, the end result will be defined during, and because of, the journey. All of a sudden, change management isn’t a one-off process but rather a constant management of change, and Kotter’s eight phases no longer run as linear but parallel to each other.
Faced with this situation, I’d argue the common thinking achieves the absolute opposite of performance today. Instead, I’d suggest it breeds fear and chastity in innovation, limiting people taking chances and accelerating the probability of the brave getting fired. It ensures organisations chase figures rather than opportunity and it limits flexible growth. I believe that performance management in uncertain times requires a more valid “Missing Management Metric”.
Introducing The Alternative Metric
I propose an alternative metric to supplement financial bias in modern business: Effort. This is because effort creates the opportunities as we exert it – mapping out our path during the journey. Here are five tangible elements needing to be prioritised, each with their own ways of measurement:
People – Identify those who are most comfortable with uncertainty in senior enough positions (or place them in such positions) so as not to suffocate the chances that could be taken. Also, identify or acquire people with this characteristic. The measurement of effort for this element should be via continual people auditing using a grid that plots volume of people with the ‘comfort in uncertainty’ characteristic against the level of seniority.
What good would look like is if there is a high volume of people with this characteristic in numerous senior positions. It’s unfortunately suboptimal if only junior staff have this characteristic.
Purpose – Be extraordinarily clear on what your purpose and vision is, so that every single person inside and outside your organisation knows the mission you are undertaking. The measurement of effort for this element should be via regular checking of how well the purpose is understood within the organisation and throughout external partners. This should be added to by a layer that checks how it is understood externally in public, through monitoring and ideally involvement in conversations outside the organisation.
What good would look like is if there was a) very high understanding and b) a close match between external interpretation and internal aspiration and definition.
Finance – Separate innovative, unproven activities in the balance sheet. Placing the risk of not moving forward as the exact same cost as the funding of exploration. The measurement of effort for this element should be in two dimensions – a) of the finance team/director’s willingness and proactivity in separating the balance sheet, assigning a tangible cost of risk through inactivity, and b) of the funding made available for the fourth priority coming up next.
What good would look like is if there was unarguable evidence of how the finances have been divided and maintained to be that way on an on-going basis, whilst continually assigning an amount for experimentation without formal targets.
Facilitation – Facilitate and reward those who are positively proactive in trying to push things forward whilst enabling them to initiate flexible un-promised projects. Remember not to link their activity to an expected outcome – however tempting. The measurement of effort for this element should be a) in the number of activities that facilitate momentum and b) in the regularity of rewarding the positive proactive people in a way that they feel valuably and relevantly rewarded (rather than something that is simply a token gesture).
What good would look like is if there was a high volume of facilitated activities with involved staff who feel permitted to experiment and rewarded in a way that made them want to strive to achieve more.
Learning – Learn from all outcomes regardless of what you may have once perceived as ‘success’. A learning is as valuable either way. Feed this into iterative projects for constant adjustment at the speed of change. The measurement of effort for this element should be a) in the volume of learnings/insights as an output of each activity and b) in the volume of learnings that have been visibly fed into new efforts.
What good would look like is a direct link between output insights that feed into inputs.
There would be significant benefits of this approach – not least of which is the belief from colleagues that your organisation can flourish, so retaining the best staff will be easier, whilst collectively learning (in advance of your competitors) where the white space of opportunity is.
I believe that innovation would be properly fuelled in an agile and relevant way, and that this framework would legitimately sit alongside the common frameworks of financial aspiration.
I suggest this presents a desirable way forward where financial opportunity comes as a direct result of applied, prioritised and rewarded effort.
* Leading Change: Why Transformation Efforts Fail by John P. Kotter (1995) – requires HBR subscription
** The Inconvenient Truth About Change Management by McKinsey (2013)
Taken as an excerpt from ’28 Thoughts On Digital Revolution’ by Jonathan MacDonald, available from Amazon as a paperback and for kindle: http://jonathanmacdonald.com/books/