With the Ascension weekend upon us, I decided to take a break from my (probably) 33 part blog post series on the 8 capabilities to boost your digitalization. In this post I want to focus on change and the resistance of change that many are experiencing around them. To illustrate this, I want to start with an example.
The last weeks have, for me, been focused a lot on the automotive industry. I spoke at the VECS 2022 conference in Gothenburg, ran a session together with a colleague from Robert Bosch GmbH on digital.auto and spent time with the electrical system architects at Volvo Cars. I am fascinated with the automotive industry as there is so much disruption taking place and new entrants are bringing new thinking to the industry at rates that we haven’t seen before. Electrification, autonomous drive and driver support functionality, connectivity, DevOps, mobility as a service, logistics as a service, etc. are all impacting the automotive industry in quite fundamental ways. The incumbents are challenged by the pace of change and struggle to respond fast enough.
The problem in automotive is not that the individuals are not open to change or do not understand what needs to be done. Instead, it is the organization, the processes, the regulation and the architectures that are holding people back. As one example, everyone in automotive wants to move to continuous deployment of new functionality in vehicles in the field. However, one challenge is that current certification practices, such as ISO 26262, are currently interpreted in a “one-time” fashion and nobody really knows how to reinterpret the standards for continuous certification. And no senior leader in these companies will bypass the certification and agree to pushing out new software without it.
Second, even if we are able to periodically push out new functionality with confidence, the next step becomes how we get paid for it as our business models tend to be transactional in nature. Most companies have great difficulty to complement the transactional revenue with recurring revenue because the systems are not set up to handle frequent small transactions cost effectively nor do they have a direct relationship with the end customer.
Third, especially in automotive, the ways of working are all focused on SOP (start of production). The idea is that all efforts related to a new vehicle are aiming at the magical date when the production of the new product will start. And once production starts, we are done, except for, maybe, some minor bug fixes. In a continuous world, of course, things do not end with SOP, but rather they start with SOP. Only when you get your vehicle or system in the hands of customers can you get the data-driven feedback loop going that drives digital companies.
Although I use the automotive industry as an example, in my experience it is the same in all industries: individuals are open to change, but feel that they are bound by the existing organizational structure, process and architectures. In order to change anything, we have to change everything.
To break out of this, the first is to focus on leadership and how to drive change. Many are looking to drive change locally in the function or department that they are part of. In practice, this is really hard because of all the interdependencies. As a consequence, the large coordination game starts where change advocates try to align with other functions and departments to try to initiate the change at the same time. This often leads to the “whack-a-mole” problem where you constantly have 80% lined up and a constantly changing 20% is resisting. By the time you have convinced part of the 20%, somewhere else a problem pops up and you’re back to 80% ready.
In my experience, it is much better to try to create a “small vertical slice” where all relevant aspects of a change, ranging from business model to technology and from sales to customer support are brought together around a new, innovative offering to prove out the new way of working. The role of leadership is to identify the slice with minimal interaction with the rest of the organization, to staff it with people that have the right mindset and then to protect them from the onslaught of distractions from the rest of the organization.
The second aspect is concerned with personal responsibility. George Bernard Shaw famously said, “The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man.” So, oftentimes being Mr. or Mrs. Nice Guy/Gal is just not going to cut it in times of change. You need ignore the naysayers, the folks telling you to stay on the team and the people criticizing you and just push your ideas forward despite everything.
The third aspect is to reflect on your own behavior. If you notice yourself reacting negatively to some change happening in your context, rather than trying to shut down whatever is being proposed, first reflect on your own emotional reaction. Is the proposed change really a bad idea or is it simply different from how things were done in the past. And if that is the case, is it a step in the right direction, at least somewhat? And even if it isn’t, can it help loosening up the resistance to change? Perhaps the right thing to do is to simply get out of the way of the people trying to make some change happen.
Concluding, in my experience, individuals in industries that are subject to rapid change are not the ones resisting, but rather it is the organization, processes, architectures and incentives. This lead to a situation where nothing can change unless everything changes at the same time, which is simply impossible. Instead, leaders need to identify “vertical slices” where something novel can be created in an end-to-end context, staff with the right people and protect the team. As individuals, we need to be unreasonable at times and get out of the way of people that are being unreasonable for the right reasons. As Jack Welch famously said: Change before you have to. So don’t wait until it’s too late. Change is hard, but change is good.