How Change Is Changing and What to Do About It
By Glenn Gonzalez, Paul Kurchina, Stephanie Overby | 14 min read
It may be tempting to point to the digital initiatives that were pushed through during COVID-19 as proof that organizational cultures, processes, and employees have learned to change quickly. After all, as Greg Layok, managing director of technology at consultancy West Monroe, writes: “[During COVID-19], for the first time, behavior is changing faster than technology … companies are achieving the goals they have long strived for under the banner of ‘digital transformation.’”
In many cases, we made those changes because we had no choice. In some cases, boards and C-suite executives approved expenditures as a matter of survival. IT teams and businesspeople adapted out of necessity.
Indeed, companies “spent the equivalent of around US$15 billion more each week on technology to enable safe and secure home working during COVID-19,” reveals the 2020 Harvey Nash/KPMG CIO Survey of more than 4,200 leaders with a combined tech spend of $250 billion. A statement accompanying the survey research notes, “This was one of the biggest surges in technology investment in history – with the world’s IT leaders spending more than their annual budget rise in just three months as the global crisis hit and lockdowns began to be enforced.”
Not surprisingly, the crisis is taking a heavy toll on employees, especially those in IT, where change is hitting hardest. What leaders expect of their teams right now – working at all hours with fewer breaks – is actually killing productivity and will thwart innovation in the long term.
“We haven’t really changed the way we’re working. Fatigue levels are off the chart at every level. The bandwidth for managing anything that goes wrong at most major organizations right now is zero,” says Wanda Wallace, leadership coach and managing partner, Leadership Forum. “While managers have adapted to the available technology, they’ve missed the real opportunity here, which is to help their teams to be more efficient and more effective.”
So what happens when that external pressure dissipates and things go back to something like normal?
If it wasn’t clear before, the global pandemic has brought it home: change has changed.
As futurist Bob Johansen tells SAP Insights, pandemics and other global crises demand that we look beyond solutions that worked in the past. Disruptions such as COVID-19 will become more prevalent and persistent and will have exponentially greater impacts on businesses, governments, and the world for at least the next decade.
So what can be done to maintain the speed and ambition of the response to COVID-19 without breaking the bank – or the backs of employees? “If work is disrupted, maybe management should be disrupted, too,” says Jeff Schwartz, principal and U.S. leader for the Future of Work at Deloitte Consulting and author of Work Disrupted: Opportunity, Resilience, and Growth in the Accelerated Future of Work. “Although we’ve been using the language of ‘continuous change,’ there’s a lot of work to be done in terms of practice and mindsets and culture.”
To make continuous change a feature rather than a bug, it must be crystal clear – to everyone from the C-suite to the factory floor – that staying where you are is no longer an option. Change is not a threat. It’s the basis for the foreseeable future, as the threat of pandemics and other big disruptions increases over time.
Adapting well will require accepting this reality. But not acceptance of capital-C change – behemoth projects with start and end dates that put everyone through the wringer and then they’re done. More like small-c change – ongoing, less tumultuous, but potentially more successful.
Change is not a threat. It’s the basis for the foreseeable future, as the threat of pandemics and other big disruptions increases over time. Adapting well will require accepting this reality.
The net result is increased stress and fatigue, decreased emotional intelligence and cognitive capacity, and thus, suboptimal performance. To illustrate the consequences for work performance, Wallace uses performance technology on her business leader clients like sports coaches use it with Olympic athletes. Cycles of stress followed by recovery optimize athletic performance both physically and mentally; the same is true for executives. Wallace measures accumulated stress, calculates the recovery needed, and helps executives find moments of recovery in the courses of their days.
How to navigate uncertainty
Leaders that build employee resiliency are better equipped for constant change.
Applied to organizational change, the process opens the eyes of executives and managers who are charged with leading (and adapting to) continuous change and enables them to manage their stress and take time to recover. It’s a way to make change constant but manageable for everyone involved.
But to get there, organizations have to tackle people’s resistance to change. The struggle isn’t due to laziness or dysfunction; it’s science. When change is forced upon people, they quickly become overwhelmed, which activates the fight-or-flight response in the primitive emotional center of the brain, the amygdala. They bottle up that instinctive response, which reemerges as anxiety, depression, and poor health if not managed. The everywhere, all-the-time nature of the COVID-19 crisis was an unnatural force in overcoming our resistance to change. Employees proved to be resilient – but at a big cost to their mental and physical health.
Some companies have begun to recognize this. The New York Times, LinkedIn, and SAP, among others, have given employees enterprise-wide days off to address or prevent burnout. Other companies are taking creative approaches to address the impact of constant change on workers, such as 30-hour work weeks.
While these programs are novel, they’re just the beginning – bandages for a deep wound. To keep the change going in a healthy way, leaders need more small-c changes, more small-scale innovations, and more acceptance of them as the norm.
From “know-it-alls” to “learn-it-alls”
One important way to make change more comfortable is to reconsider the longstanding – and still prevalent – model of a career as “one and done.” Individuals may switch employers, but they largely do the same kind of work at an increasingly higher level. “You go to school, get a job, hop on the career ladder, make a series of linear sequential moves for 20 or 30 years, and you retire,” says Schwartz. “But that’s not what a career is any more.”
The half-life of skills is rapidly declining – it’s currently at about five years, according to Deloitte University Press. Meanwhile, the average career length is increasing rapidly as healthcare improves and people live longer. Deloitte estimates that careers soon could span 60 to 70 years.
When our minds are tied to the single career idea, it’s painful to go through multiple transitions. “But if we told people, ‘You know what, expect to have a dozen jobs and five major transitions in your life,’ then you’re more prepared,” Schwartz says.
In 2017, Yuval Noah Harari, Israeli philosopher and author of international best-selling books Sapiens: A Brief History of Humankind and Homo Deus: A Brief History of Tomorrow, told Time magazine, “I think your best bet is to develop your emotional intelligence and your resilience, the ability to keep changing all the time.” Historically, he explained, life was divided into two main parts: the first part, in which you acquired your knowledge, skills, and identity, and the second part, in which you made use of them. The pace of change in the 21st century, he argues, makes much of what you learn quickly irrelevant.
Organizations instead can foster what Stanford University psychologist Carol Dweck terms a “growth mindset,” whereby employees embrace the continuous change associated with market and business shifts because they believe they can grow and develop capabilities over time. In her research, Dweck distinguishes people with fixed mindsets, those who believe that basic qualities like intelligence or talent are static, from those who think they can develop talents and capabilities over time through effort. The growth mindset, Dweck argues, creates greater individual resilience and adaptability and makes individuals better at problem-solving and change.
Organizations can foster what Stanford University psychologist Carol Dweck terms a “growth mindset,” whereby employees embrace continuous change associated with business shifts because they believe they can develop capabilities over time.
The need to shift mindsets is the biggest block to successful change, McKinsey notes in a recent article: “The key lies in making the shift both individual and institutional – at the same time.” In the 2019 book Beyond Performance 2.0, McKinsey notes that none of the executives at companies that disregarded an analysis of employee mindsets during a change program rated the transformation as extremely successful. At the same time, executives at companies that addressed their employees’ mindsets were four times more likely to rate their change programs as successful.
The leaders at one engineering company featured in the book were consistently overoptimistic about results and underestimated competitors. The company realized that its issues stemmed from the idea that “winning means being peerless,” which leads to insular behavior. Shifting that thought to “winning means learning more and faster than others” encourages employees to look for best practices in competitors and beyond.
Kevin Oakes, CEO and co-founder of the Institute for Corporate Productivity and author of Culture Renovation: 18 Leadership Actions to Build an Unshakable Company points to the benefits of such an approach at Microsoft. “Using the concept of growth mindset, Microsoft changed to an attitude that knowledge-sharing is power,” he says. “To reinforce this, [Microsoft CEO Satya Nadella] very publicly declared he didn’t want a company with a bunch of know-it-alls. Instead, he wanted a culture of learn-it-alls and continually stressed the importance of growth and development.”
This approach has served employees and organizations well during the COVID-19 pandemic. Researchers from the University of Zurich found that employees who adopted a fixed mindset about remote work (“I’m just not good at remote work”) experienced more negative emotions and less perceived productivity than those who held a growth mindset (“I can get better at this”).
Not just another change management program
Executives also need to change their leadership mindsets. They tend to view change as highly structured and episodic, which is the opposite of continuous. “So much of what we’ve been doing in change management is to take an organization or program at rest, put an enormous amount of energy into putting it in motion, and then let it rest again, hoping that that reconfiguration will be good for more than a few years – five or ten would be amazing,” says Schwartz.
Digital Transformation
It’s more than just a technology initiative, it’s a cultural shift.
This approach to change may do more harm than good, says Tom Weeks, senior consultant with the Arbinger Institute, a consultancy that works with organizations to encourage change from within. “The change program becomes the change rather than the results you’re trying to achieve,” he says.
Using the traditional management approach to change creates a short-term view and can drive short-term change. But it doesn’t do anything to shift mindsets to accept and welcome continuous change. And “if you’re not shifting fundamental mindsets,” Weeks says, “it doesn’t matter how much money or how many resources you put behind it.”
Change will never again be discrete – if it ever was. To make small-c change continuous and sustainable requires something more like what The New York Times columnist Thomas Friedman has called “dynamic stability.” “It’s the stability you achieve when you are constantly in motion,” explains Schwartz, “which sounds like a contradiction until you think of riding a bike. You’re most stable when in motion. These shifts we’re going through – this constant change – it is exhausting, unless you create dynamic stability.”
Reorganizing for flow
Perhaps it’s time to stop using the T word altogether. Transformation, by nature, is radical and massive in scale – something that no company can maintain for extended periods of time. Sure, moon shots are exciting, but a small step is still a step forward. And in the digital era, that’s what most organizations are seeking to foster: forward momentum.
But COVID-19 didn’t give us that capability, nor is our response to COVID-19 a good model for the future. We correctly viewed it as a crisis, but crisis management and business continuity planning aren’t sustainable. They are designed to respond to a disruption and then return to normal.
We will always need crisis response, but we need to create change processes that make those crises less taxing on the organization and its employees. As Deloitte’s 2021 Human Capital Trends report found, business leaders are expecting the unexpected. “We’re recognizing a need to be prepared for more uncertainty than ever before,” Schwartz says.
A sustainable model for change
A more sustainable model for change may be a hybrid one. Consider the step-and-slope approach: transformation will happen every once in a while, when external drivers are compelling big action, but continuous small-c change becomes the focus between significant change events. The approach reduces the number and size of each move, optimizes the business continuously, and ensures that step changes are maximized.
However, these advantages are only possible if organizations let go of outdated change methodologies and focus on leading and embedding change with the right mindset, capabilities, and commitment.
“If work and societies are being disrupted, our management must change in some fundamental ways. We have to seriously look at whether we can lead 21st century organizations and people with the same management canon of the 20th century, largely organized around supervision, control, predictability, accountability,” says Schwartz. “We’re moving to a world where what’s becoming important is orchestrating, navigating, coaching, cocreating, and being transparent. It’s not enough to look at how change management needs to change. We don’t need another change tool. It’s about a larger shift in how we lead and manage organizations.”
Call it the end of the beginning of the future of work. “We spent 10 or 15 years exploiting and experimenting with all these new technologies,” Schwartz says. “In 2020, those side streets became our main avenues. Now we’re asking how we lead and live in new ways. And how we do that at scale and speed.”
Everything about the way we work has changed drastically during COVID-19. And business leaders are hoping to remake their organizations to survive and thrive in the long term. The one thing that has yet to change: how we approach the change. The time for that has come.
“In March, we all boarded a coronavirus time machine to the future,” says Jeff Schwartz, principal and U.S. leader for the Future of Work at Deloitte Consulting and author of Work Disrupted: Opportunity, Resilience, and Growth in the Accelerated Future of Work. “The tools that would have taken five to 10 years to develop and launch took five weeks or even five days.”
It’s no longer about what’s possible. It’s about achieving the possible in the most sustainable way. Time will tell how the future of work evolves, but we have some early clues about the qualities that will separate those organizations that succeed in fostering ongoing growth and change.
Flexibility. Leaders that create the right conditions for embracing change have employees that feel a sense of accomplishment, value, and appreciation when they solve a problem on their own. Such an environment not only helps increase employee engagement but just as importantly drives continuous innovation.
Agility. The key is promoting change that is constant but not so torrential that it overwhelms everyone. Taking a more incremental approach allows organizations and their employees, partners, suppliers, and customers impacted by the change to experience and react to changes while they are being developed, tested, and validated.
Autonomy. Organizations that give their employees agency in the changes that impact them fare better. By aligning organizational principles with personal empowerment to respond to new dynamics, organizations become more fluid and adaptive, and employees readily accept new ways of thinking and model new behaviors.
Storytelling. Strategic narratives empower leaders and employees to embrace change. A vision of what the business is striving to accomplish enables everyone involved to understand what’s happening and adopt compatible behaviors to realize a shared purpose.
Resilience. Change-capable organizations give all employees the tools they need to manage the psychological stress that comes with change. Learned listening, mindfulness, and meditation training can teach employees how to become aware of their personal biases and perceptions about change and the resulting impact on their emotions and behavior. The more everyone can stay present and choose actions wisely, the more they can act on behalf of the business with calmness and clarity.
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