Crelos Change Mastery Series, Think Change: Think Different, 14 November 2013

 By Alana Inness, Consultant, Crelos

 

Would you apply the same model of change if you were trying to influence changing the way the world values human capital or if you were trying to solve the world’s obesity problem? Do traditional change management models work or do we need to think differently?

At our latest event, we heard from panellists Dr Raj Thamotheram, a thought-leader in the field of long-term, sustainable investing; Vishal Chhatralia, Head of eCommerce Change at RS Components; Benjamin Baker, Head of Lloyd's Market Association Academy and Guin Batten, COO of the TOP Foundation at Youth Sport Trust who shared their experiences of change, the approaches they used and the lessons they learnt.

 

The Financial Sector – everyone wants culture change, or do they?

 

Dr Thamotheram, a thought-leader in the field of sustainable investing, kicked off the event with a lively account of trying to change the way investors think to ensure investment is sustainable in the long term and not just profitable in the short term. Thamotheram talked about the financial sector’s “immunity to change” and that the current dominant narrative is to blame a “bad apple” rather than to confess to issues and change the underlying root cause. In trying to understand how to change investors approach, he uses his medical training to first start off with a correct diagnosis and talked the audience through the BP Gulf of Mexico oil spill as an example, where even as the crisis continued, analysts became increasing belligerent and had rising stock prices.

Whilst even the Governor of Texas blamed “an act of God” (the proverbial bad apple in this case) for the BP disaster, looking back at the data there were many warning signs that there was a “cultural deficit in health and safety management” at BP (Baker, 2007). There had already been a number of oil leaks, serious accidents and regulatory violations by the time the Gulf of Mexico oil spill occurred but Thamotheram therefore describes this as a “predictable, preventable surprise” and diagnoses the cause being due to the supply chain being overcomplicated (Figure 1).


Figure 1: Investment Supply Chain (Courtesy of Dr Raj Thamotheram)

Continuing along the medical analogy Thamotheram shared what he believed were the five sustainability patient types; Happy Imbeciles, Supportive Pessimists, Denialists, Market Efficiency Fundamentalists, Sustainability/Governance Smooth Talkers. However he believed that these patient types all used different versions of the same excuse, which in the end all prevent change.

Thamotheram then asked the audience for their views on how to influence the financial sector in changing its approach to sustainability. There were two key thoughts that came out of discussions that centred around the tenure of CEOs being such that what they consider a long-term vision is actually 3-5 years and so getting a longer term strategy that encompasses sustainability is unlikely. The other theme was around the rewards for stakeholders, whose incentives are often very short-term and while this is the case then the behavioural change required to invest sustainably will never be realised; it was suggested that perhaps a “bigger stick” was required.

Whilst there was some suggestion that experts believe that data is getting increasingly good so things are becoming more predictable and therefore there will be a “smoothing” in the number of crises, Thamotheram suggested that data is often overlooked if it does not fit the cultural emphasis, as in the BP case where cost cutting in order to reward shareholders was seen as more important than health and safety. His own prognosis was that there is likely to be much more environmental disruption before serious progress is made on sustainability but his own prescription would be:

  1. Make mitigating/preventing “Preventable Surprises” a core part of the investor day job (stewardship is critical)
  2. Embrace integrated reporting and thinking (investors too!)
  3. Fundamentally re-think pay and metrics
  4. Advocate government action where markets solutions can’t work or are part of the problem
  5. Innovate new investment forms (e.g. Evergreen)

 

An ever changing world: The Challenges of Delivering Youth Sport

 

Following Dr Thamotheram’s insightful look at sustainable investing, former Olympian and COO of the TOP Foundation of the Youth Sport Trust, Guin Batten took the floor to share the journey of her organisation in trying to deliver their vision of all young people getting high quality engagement in sport from the start of their education.

As with the previous speaker, a key barrier to making effective changes was the short-termism within the macro-environment of sports education. The influence that the ruling party in government has over the education in general was deemed by Batten to be particularly problematic; education is unique as the Secretary of State for Education, whilst not an educator by background, dictates what is taught and how it is taught whereas this is not so for other cabinet ministers, such as that for health. Headteachers are measured on exam results and so invest in activities that are most likely to be linked with improving academic results and rely on wider government initiatives for funding for other programmes. Whilst the Youth Sport Trust is a charitable organisation that is not politically motivated, its close working relationships with the previous ruling party meant that the new government withdrew support for a lot of the activities that had been supported by the previous incumbent. The lack of long term funding means that many sport’s governing bodies are operating on a one year funding system so they cannot be strategic in the way that they operate.

In realising that the environment was changing, that many of the 450 schools Partnership Managers would lose their job and the system, which had been working well would be dismantled, the Youth Sport Trust decided to manage this change by ensuring that their core vision was strong and that they continued to communicate it in a way that everyone could understand. They continued to talk with headteachers, teachers and young people to provide a constant vision for schools:


Figure 2: YST Vision (Courtesy of Guin Batten and the Youth Sports Trust)

Whilst the prediction that Partnership Managers would lose their jobs proved to be accurate, young people themselves put up a brave fight collecting over a million signatures that they gave to the government and subsequently the Young Ambassadors was the only part of the programme not to be cut.

To ensure that the organisation was not so vulnerable in the future, the Youth Sport Trust created a strategy that was not so dependent on one source of funding (the government) in order to spread the risk. This strategy pulls instead on multiple partners building on strong links with the corporate world, direct links with schools and with sporting governing bodies, who had often competed previously for talented individuals but are now having to work together to attract young people away from the allure of “screen time”.


Figure 3: YST Strategy (Courtesy of Guin Batten and the Youth Sports Trust)

Batten closed her session by reminding the audience why getting young people engaged in sport is important and why the change process needs to look at the big picture. It costs £70,000 per year to keep a person in a young offenders institution and in the UK £5bn is spent each year on obesity; whilst sport may not be the only solution it is one of them.


Figure 4: The Big Picture (Courtesy of Guin Batten and the Youth Sports Trust)

Change in a 325 year old organisation: Raising the Profile of Education in the Lloyd’s Market

Following energetic audience discussion during the break on the insights from the first two speakers, Benjamin Baker, Head of Lloyd’s Market Association Academy, told us about the challenges of embedding change in a culture with a long history and lots of ingrained perceptions.

His challenge was to consolidate and raise the profile of education in a membership organisation with 85 companies. He noted that in order to make change work the following ingredients were required:

In order to create a clear message Baker put a clear structure in place for the academy that he set up, which had previously been absent from the education offering with many interventions being offered on an irregular and adhoc basis.


Figure 5: Education at the LMA (Courtesy of Benjamin Baker and the LMA)

Baker then told the audience about communication in a cohesive way by consolidation of what had been three separate websites on different elements of education into one site. The approach to rolling out and communicating the new structured academy was fairly gentle using word of mouth and working groups to gain collaboration; talking it through, listening to naysayers and understanding their concerns.

In order to gain credibility Baker believed it to be important for the programme to be validated and accredited by the professional body for insurance and financial service (the CII). This was completed quicker than expected and has meant that individuals are taking the academy seriously, showing the importance of getting the endorsement of the people or body with high levels of influence over the population you are running the change programme amongst. Baker also noted that having both a technical specialist and a learning and development specialist as the core team helped build the credibility of the programme.

Baker closed by sharing his key learning from implementing the changes:

  1. Have a clear vision
  2. Break things into logical steps
  3. Keep the momentum going

 

Leading Digital Change

 

The final speaker of the evening was Vishal Chhatralia, Head of eCommerce Change at Electrocomponents, who painted a vivid picture of his recent experience of the organisation’s efforts to move from a very embedded offline approach to a more agile, digital one where data is used to drive decisions and become more dynamic.

Chhatralia started by recounting the first attempt at changing ways of working by using what they believed to be a tried and tested model; the 8 Step Change Process (Kotter, 1995). On paper this looked simple and sounds logical, they believed they had put all steps in place successfully but in practice the process was rather more painful than they had envisaged. Whilst a logical process was executed, in reality they delivered late and over budget with a number of people leaving the organisation voluntarily, despite getting feedback through the process that suggested they were on track and had people on board.


Figure 6: Adapted version of Kotter’s 8 Step Change Process (Courtesy of Vishal Chhatralia)

So what went wrong? Chhatralia went on to talk about their second crack of the whip and how they used their learning from their less successful attempt to ensure the benefits of the new model of operating were realised.

Firstly they looked to Apple and Nike for lessons in creating a sense of urgency; through this they discovered they needed to focus on the “why” instead of focusing on the “how”. They found it was important to help others to understand that what they had been doing to date was not wrong, it had made them successful so far, but that it was the world that had changed and in order to remain competitive in a new environment they would need to operate differently. Doing this took away some of the defensiveness about the need to change. Chhatralia said “the first time round we told them the why, the second time we told them the challenge and got them to come up with the why”.

The second important part was not just to create some pockets of “coalition” but instead create coalition at every level in the organisation. This involved identifying who their early innovators and adopters of change would be on the ground, in middle management and in the leadership team. It was a conscious decision not to try to excite everyone but instead use these advocates to inspire change and embed the vision as part of their daily working activity.

Chhatralia reiterated that people are often the biggest obstacle in embedding change and ignoring them is a big mistake. Cynics can quickly spread doubt even in the group of early adopters so it is important that the advocates are passionate and strong, in order to get this sometimes people have to be recruited from outside the organisation to get the unwavering support required and create the tipping point needed for change.

Whilst Chhatralia said they “surveyed the hell out of them” in the first attempt at change, they subsequently concluded that people were not emotionally secure enough to be open about how they were feeling. So during the second attempt instead of surveying they used the advocates to get feedback on the ground in a more informal way and also identify which wins to celebrate. This now seems to be taking effect and the green shoots of change are appearing.

Crelos hold regular events on various change related topics. These events provide a unique opportunity to learn from the experiences of our headline guests and to take part in wider thought provoking discussion around the topic of change. If you’re interested in finding out more or taking part in one of our events, please contact charlotte.sampson@crelos.com.

References:

Baker, J. at al (2007) The Report of the BP U.S. Refineries Independent Safety Review Panel. http://www.bp.com/liveassets/bp_internet/globalbp/globalbp_uk_english/SP/STAGING/local_assets/assets/pdfs/Baker_panel_report.pdf, accessed 19 November 2013.

Kotter, J.P. (1995) Leading Change. Boston, MA: Harvard Business School Press.