Change Management: the complicated case of context and diversity

Understanding context is crucial to achieving influence and impact in Change Management. But do you have enough diversity to truly understand the context, and what about the known-unknowns that get in the way?

In a world that is in a state of accelerating change and complexity, successful change leaders are the ones who recognise and respond appropriately to the type of context they are in and cast the net for diverse perspectives as broadly as the change is complex. This demands a set of skills that might not be intuitively obvious to managers and leaders new to change management.

A few years ago I encountered a bright young Engineering Manager who was leading a project to reduce the cost of an electricity generator product. After consulting his manufacturing colleagues, one of the ideas that moved forwards to implementation was to split the product into more component pieces for delivery to customers’ sites so that it would fit into fewer containers for delivery, thus reducing shipping costs.

At the next round of technical briefings with dealers, who also installed the generators at customer sites, the Engineering Director proudly updated them on the new design…. Only to be greeted with confusion, frustration and disbelief! The time and cost of assembling more parts on site were going to increase the cost of installation by around 30%.

To use Snowden’s CYNEFIN Framework for Decision Making, what the young manager had unconsciously assumed, was that he was in a simple context, where cause and effect exist in a linear relationship of known knowns: “if I reduce the number of containers then I will reduce the product cost”.

Snowden & Boone (2007)

What the young manager and the leaders who ratified the change implementation failed to spot, was that the context was potentially complicated. The cause and effect relationship was still linear, but its full extent was not apparent to everyone in the change project - known unknowns. But in reality, the state was disorder, as nobody was explicitly aware of what context they were in.

The turbulent chaos that ensued for a short while afterwards whilst the dealers threatened to ditch the manufacturer’s products resulted in an unhappy compromise between losing the cost-saving made by the change and saving the sales channel.

Our young manager’s case begins to demonstrate that as the context becomes more complicated, an important appropriate response to manage risk and create opportunity is to move beyond the familiar experts and invite appropriately diverse perspectives to the table.

In this case, it might have included the sales team or dealers. In a broader sense it might mean diversity in the forms representative of society, such as age, gender, ethnicity, disability, neuro- and socio-economic diversity; forms that relate to work, such as hierarchical, functional, supply chain and customer stakeholders; as well as forms such as personality. As Ashby’s Law of Requisite Variety states:

If you have complete knowledge of a system, it is possible to control it. However, if the system has some hidden properties your information is incomplete and there is uncertainty about the behaviour. To have full control you need to have full knowledge of the system and its behaviour.

It might not always be possible to have full information and fully control a situation, but the representation of different perspectives improves the chances of catching risks and sparking innovative ideas. Those chances are amplified if the change manager has the skills to foster an environment of openness, where everyone is listened to and their ideas are valued and considered. Given this might need individuals to challenge their own underlying beliefs and assumptions, the change manager needs strong emotional intelligence to build empathy and trust.

Our relatively straightforward case is typical of how many change projects are managed. Managers and leaders are assigned to change projects without the skills to understand their contexts and so respond intuitively rather than with consideration for context-appropriate responses and the expected benefits are never realised.

If we zoom out and look at the situation in most energy companies today, they are facing multiple layers of change driven by: decarbonisation, decentralisation, digitisation and democratisation, not to mention regulation. This has generated huge flux in the market and the context for managing change is nothing but complex.

Take the case of the innovators trialling battery-related business models to store renewable energy when it is in abundance and sell it back to the market when the wind isn’t blowing and the sun isn’t shining. These are new technologies with significant associated risk, with no certainty of how they will persuade consumers to buy them, or how digital interoperability will render some of them obsolete - think VHS and Betamax in times of video rivalry. Then layer on top the regulator’s decision to change a market rule to fix an unrelated problem, which wiped out the viability of the battery business model, in spite of its strategy and white papers declaring support for just this type of market!

It is impossible to deduce the right answers in this context by analysing a neat list of options because there are too many interdependent variables changing continuously and cause and effect can only be observed, if at all, in hindsight. We are in the context of unknown unknowns.

The leaders who know how to respond appropriately to complexity are exploring their options with safe-to-fail experiments, observing the outcomes, iterating and allowing sustainable solutions to emerge. Equally importantly, they are inviting diverse cohorts to collaborate together in only minimally governed groups to generate and develop new, leading-edge ideas that will delight their customers and give them the competitive edge - the good ones in the energy sector include the regulator!

I have seen some exemplary leaders reading and responding adeptly and with significant impact in this complex transformation arena. But all too often I have seen huge gaps in the capabilities of change managers who are not literate in the language of complexity and diversity, and are not sufficiently adept in channelling their emotional intelligence to foster openness and trust.

The question is how to bring these gaps to their attention and then plug them?

If you share these concerns and want to explore how the Good Life+Work Project can help, then please get in touch at:

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