Organizations typically frame behavioral change as a response to the external environment. A trend presents an opportunity or threat. The wise and courageous leader inspires a "culture change" with the support of imaginative and intelligent advisors, and charts a new course. The loyal rank-and-file learn the new skills needed, and head in the new direction with enthusiasm.
This model is, of course, complete bullshit.
I learned how change actually happens over a decade ago from one of my favorite people, my old boss at Xerox, Steve Hoover (then the VP of the Webster research center where I worked, and now the CTO). In a conversation, in response to my question about why we hadn't yet responded to an obviously important (and by then years-old) trend, Steve observed, "Of course I know we have to make the leap to X. But make the leap with what?" As it worked out, I played a role in supplying him with a "what" for that X -- the beginnings of a new capability.
So the real answer to how organizational behavior actually changes is: "through executive sponsorship." Sponsorship of what, and how? Sponsorship of an emerging capability development option through a series of progressively higher-stakes fractional farm-bets. I'll explain what this means in a minute.
That's how a change actually happens: in response to the internal (or acquired through M&A) emergence of a new capability, which often begins years ahead of behavior or direction changes. If it results in a response to a trend, that's an effect more than a cause. We talked about how capabilities actually emerge last week. Now let's talk about when and how that leads to changed organizational behaviors, and in the best case, new directions. And what "executive sponsorship" actually means.
The executive sponsorship 2x2
1/ A truism in the management and leadership game is that change most change initiatives, on the order of 50-70%%, fail. John Kotter is the best known authority on this subject. His books are among the rare ones that frame the stark reality of change honestly.
2/ It is widely recognized that one of the necessary conditions for successful change is executive sponsorship. But people rarely explain what this "sponsorship" process entails, how it works, or just how central it actually is. "Executive sponsorship" is invoked like it is a fairy-dust success factor, like Cinderalla's fairy godmother showing up.
3/ To first order, if you're not a powerful executive, any effort to change an organization boils down to a two-part plan: 1) nurture the acquisition of a new capability 2) get a senior executive to use the capability to do things differently.
4/ As I argued last time, nurturing a new capability is not about "capability maturity models" that end in gleeful bureaucracy growth. It is about getting to the "unconscious competence" level of tacit, culturally embodied deep skill. This requires this mysterious "executive sponsorship."
5/ John Boyd's "be somebody, or do something" challenge frames it right. A new capability is a "do something" project. This means it typically languishes in the shadows and margins for years, away from the glare of the spotlight of visible career progression.
6/ Not only do the capability acquisition activities -- side projects, experimental prototypes -- not attract rewards and promotions, they in fact typically attract active contempt, derision, and hostility. You might live in the "first they laugh at you" doghouse for years.
7/ The researcher in the obscure lab being the lonely champion of an out-there idea for years. The mediocre-sales salesperson championing a novel go-to-market playbook for years. The overenthusiastic customer. These are the patient zeros of change. True "change agents."
8/ Organizational change is of two types. The first, and by far more common kind, is a change in behavior without change in direction. The second, and much rare kind, is a change in behavior that results in a changed direction.
9/ The first kind of behavior is typically an efficiency or productivity related change that increases margins but not revenues in a business (or lowers costs/overheads in a public agency or nonprofit). It may be pure austerity (less travel) or involve a skill (lean six sigma).
10/ The second kind, and the only kind that interests me frankly, is a behavior change that leads to a direction change. This kind of change can be plotted as a set of discrete moves on a 2x2 as shown.
11/ The x-axis is the locus of agency: in the ranks or in the executive suite. The y-axis is the perception of the related environmental forces: as threat or optionality (NOT opportunity).
12/ This is an important point. Opportunities are always all around us, but vanishingly few represent optionality as well. An option is an opportunity that you have a designed capability to act on. Companies often use this exact language. At Xerox, we talked about TIOs: "technology investment options."
13/ A capability usually begins life in the ranks+threat quadrant, labeled CONTEMPT. Change agents can spend years in this quadrant, sustained either by a small tribe of believers, or by their own cheerfully psychotic inability to see the disdain and contempt. Hence the association with crackpottery.
14/ During this period, the capability exists as an internal stressor. A source of annoyance to others. Somebody others wish would kinda go away and stop bothering them. Truly enlightened executives, like Lord Vetinari of Discworld's Ankh-Morpork, make it a point to cultivate these crackpot stressors on a bare-minimum life-support.
15/ Often this stage of "silent sponsorship" is private, never publicly acknowledged, comprises plausibly deniable support actions, and might take the form of mere benign neglect and a curious reluctance to stamp it out despite complaints from more important players.
16/ At some point, some mix of environmental forces and churn or political maneuvering at the top compounds and amplifies the internal stress being generated by the nascent capability, and there's a sudden shift to the CRISIS quadrant. This is shift is marked with the red A: STRESS arrow in the 2x2.
17/ In the CRISIS quadrant (executives+threat), there is often sudden executive-level movement, coupled with a discontinuous increase in the urgency level. John Kotter talks about the importance of urgency in A Sense of Urgency. In my experience, only executive attitude shifts, signaled in visible ways, can create it.
18/ Note that this is genuinely perceived in the C-suite as a real crisis, not a fake one manufactured to justify cynical and small-minded plans like harvesting a market of suckers or laying off inconvenient people. What provokes the sense of crisis is not the external events, but the new perception of a nascent internal capability in a strategic light.
19/ Suddenly, what has seemed for years to be an annoyance on the margins becomes a lever of change. A "what" to "make a leap" with. The internal stresses compounded by external forces and top-level movements cross a criticality threshold that drives this perception shift.
20/ I've argued before that good CEOs don't steer. This generalizes to all senior leaders, who all recognize that momentum is more important than nearly any forced steering option. Their job is to maintain a dynamic balance of power between contending of forces. Steering is generally a brute-force last resort way to change direction.
21/ What "executive sponsorship" does is indirectly cause a change in direction by bringing a previously un-activated capability into play, thereby shifting the prevailing dynamic balance of power. This is not a trivial act. Think of it as "letting a rogue force get away with more and more until you finally let it get away with murder" (of the old business model/way of doing things etc).
22/ This is what distinguishes a real sense of crisis from a manufactured one: the changed perception of an emerging capability in a strategic light. In a manufactured crisis designed to justify cynical actions, new capabilities are explicitly eschewed as too dangerous to use in the script.
23/ This is an important point. When you're trying to to manufacture a crisis (usually by blowing up a trivial but real problem rather than pure invention) to do something stealthily, you want complete control of the mechanisms to control the narrative. You only want to deploy trusted, known capabilities in response.
24/ Emerging capabilities, by definition, are temperamental, unstable, and take time to mature to full effectiveness. They are likely to have uncertain effects that trigger organizational learning and capability scaling processes, which are very costly and margins-hurting at scale.
25/ Emerging capabilities weaken control over the narrative and the optics. It's the last thing you want in a manufactured crisis. You only look foolish and like a drama-queen if you deploy a not-yet-ready solution for a controlled crisis that is obviously better addressed by an existing mature capability.
26/ Manufactured crises are much easier to navigate since they are fundamentally a small thing blown out of proportion through emotional narrative appeals. You just stay close enough to the action to associate yourself with predictable success but not so close that you'll be blamed for unexpected failure. That's how you write yourself into the story as the hero.
27/ A real crisis, on the other hand, is a situation that demands a response, but which existing mature capabilities cannot address with high likelihood of success. The shift in perception is a shift from a sense of helplessness to a sense of "this is something, I could try this."
28/ To genuinely activate and use a new capability for a strategic shift, executives must be faced with even worse consequences of doing nothing. A new capability is typically seriously deployed only in a "it can't possibly make things worse" last-ditch situation.
29/ The disconnect between manufactured and real crises is incidentally the root cause of the "poster child" effect, where a very real emerging capability is deployed in a way that guarantees it will not have an effect.
30/ This is the transition marked E: BANDWAGONING which catapults a capability straight from the CONTEMPT quadrant to the THEATER quadrant. To avoid this, it is very important for change agents to be very skeptical of being co-opted for anything but a genuine crisis.
31/ The signs of this are very easy to recognize: you'll suddenly be called upon to do lots more talks, pulled into important meetings with customers and other outside stakeholders, and generally have praise lavished on you for your vision and prescience. But you will not actually be allowed near anything mission-critical.
32/ By contrast, being dragged into a real crisis will be done with obvious reluctance, and under conditions of rancor and heated conflict. The executive sponsor will take real fire for activating the option.
33/ Assuming you avoid the allure of invitations to manufactured crises and protect your fragile young capability from being turned into a poster-child project and then into a bandwagon effect leading to a theater, if you wait long enough, you'll eventually find a true A: STRESS pathway to the CRISIS quadrant.
34/ Can you create the compounded stress from the outside/top instead of waiting for it patiently in obscurity? Sometimes, but not as often as corporate guerrillas pretend it can be done. This miscalibration is partly due to wishful thinking, partly due to inappropriate analogies to war.
35/ In general, the energy required for the stressor scales in proportion to a) the size of the organization you're trying to change, and b) the degree to which you're trying to create rather than destroy. At some point, it's too big a stress to proactively create. You have to wait for help from the environment.
36/ This is a key difference between business versus war uses of models like the OODA loop. It is simply far harder to "create" opportunities to act from an in-the-ranks guerrilla position in business than in war, because the energy demands are too high. Simple FUD making and chaos-creation don't do the job.
37/ Once the crisis passes, we enter a critical and dangerous period, since there is an extremely strong temptation to act in ways that turn the seed of capability into a theater rather than a truly activated capability. Why?
38/ Executives after all, are human, as inclined to take the easiest path forward as anyone. They are generally more interested in the optics of a crisis than the substance. Even if it is a real crisis rather than a manufactured one, they are more interested in being seen to act than actually acting.
39/ If you miraculously managed to avoid the E: BANDWAGONING pathway for years, you still have to navigate the D: BACKSLIDE pathway, which also leads to the THEATER quadrant. Both are equally bad, since there is generally no exit from the THEATER quadrant. It is the hell of other bureaucrats. An eternal drama of sound and fury signifying nothing.
40/ Backsliding happens because executive attention wanders off to the next crisis, and suddenly you're back in the grips of middle-management and bureaucracy processes. Especially in an aging organization where Pournelle's Iron Law of Bureaucracy has taken hold. And the bureaucracy will steer you to a safe parking spot in the THEATER quadrant.
41/ You'll be back to square one. Perhaps with a nicer office, and more invitations to things, but exactly as ineffective as you were before. Instead of being an annoyance on the margins, you're now part of the Great Corporate Traveling Repertory Theater. On call to put on dog-and-pony shows on demand.
42/ You won't actually get resources to take the capability to the next level. Instead you'll get just enough additional resources to deal with the new theatrical duties. And the company of more annoying people. And the only thing worse than honest, open contempt: insincere, cynical support.
43/ The trick to avoiding this fate is to avoid exiting the executive attention Overton window. Real capability growth -- unconscious competence as in the Omega Learning model -- only happens by taking on progressively bigger and bigger challenges.
44/ This is the spiral trajectory marked B: ACTIVATION that takes you from the CRISIS quadrant to the EXCITEMENT quadrant. It is broken down as shown into a number of stage-like steps of real capability maturation. Each represents a higher stress-loading than the last one.
45/ This "real capability maturation" is measured not in terms of cosmetic organizational symptoms in the form of an evolving bureaucracy, industry best-practice prizes, or scores on standards certification audits, but in terms of what you might call the "farm bet fraction."
46/ The phrase comes from the "bet the farm" metaphor. The original crisis that precipitates a move from CONTEMPT to CRISIS can be considered a "save the farm" move, but "bet the farm" is a whole different process. The "farm bet fraction" is the percentage of the value of the organization put at risk through a irreversible growth-oriented action.
47/ The difference is that you're creating stresses in the form of increasingly higher stakes positive options. Due to loss aversion, it is easier to engineer a "save the farm" move with $100 million at stake than to engineer a "bet the farm" move with only $10 million at stake.
48/ For example, changing the flavor of Coke would be a huge farm-bet fraction for coca-cola. If it works, it could change fortunes and beat off the challenge of that pesky new kid on the block, tap water. But if it fails, it might be a death sentence even if you go back to the original Coke recipe.
49/ Here is where the criticality of "executive sponsorship" actually comes in, and finding the right sponsor makes all the difference. Any good, professional executive will respond well to a genuine moment of crisis. The more excellent and high-flying they are at running their division or function, the more effectively and heroically they will respond.
50/ But paradoxically, excellence in crisis response in an executive makes them generally terrible at acquiring deep capabilities, which is a longer, slower game. The identities of heroic executives are based on being good at something. They like to look good. They don't like to look foolish, indecisive, or amateurish.
51/ Effective and excellent crisis response is often a way to make your bones as an executive. Being the hero of a Great Crisis is one of the best ways to level up from say VP to SVP. The entire top of the hierarchy is designed to select for heroes of Great Victories.
52/ But capability growth is a very different challenge from crisis response. It is a learning and discovery activity. You have to take on progressively larger farm-bet fraction activities to grow the muscles of the new capability.
53/ As with any learning activity, there will be mis-steps, fumbles, and awkwardness along the way. At every scale, you have to relearn or refine the behaviors learned at the last scale. You will often look foolish or amateurish. The products of early capability growth stages might looks janky and ugly.
54/ It's not a good look for an executive to be associated with this kind of real capability maturation spiral. In fact, the only executive who can pull it off relatively easily is a CEO with a sufficiently strong halo.
55/ The process is something similar to weight training. As serious lifters tell me, the timing and cadence of progressive loading is critical as you train to lift higher weights is critical. The training schedule can make the difference between futile thrashing around and injuries, and gaining strength rapidly.
56/ You lift X pounds, just a little past what your muscle your body can easily handle. Your body overcompensates by growing more muscle than needed to lift X, say X+y pounds. But just as the overcompensation is about to correct itself with atrophy, you do a workout with X+y+z pounds. Then repeat.
57/ The result is that you're growing the capability as far as possible in a sort of spiral loading process. With each increase in the load (remember, these are increasing bet-the-farm moves, as you risk more and more of the existing business or organizational mission on the new capability).
58/ All along the spiral, you need optimal nutrition at the right time as well, to avoid gaining either too much deadweight (the "flab" that typically accumulates from the aggressive but undisciplined cultivation of a new capability) or trying to do too much too soon and hurting yourself.
59/ The "executive sponsorship" is really the mindful attention to the progress along this learning spiral. Since optimal timing and tempo of learning/loading/nutrition is critical, the attention has to be continuous, not sporadic. The "executive" is an executive in the sense of the brain's executive function in the neocortex, modulating cortical and subcortical behaviors.
60/ The backsliding threat is there every step of the way. At any moment, a greater crisis could "snipe" the "sponsorship" attention, leading to it getting taken over by either well-intentioned incompetent seconds, or malicious bureaucrats. Or the demands on executive attention might increase during a bad quarter to the point that the capability sponsorship falls out of sight.
61/ The kind of executive who can provide this kind of sponsorship is typically not the excellence-obsessed, hard-driving, heroic crisis player. Instead, they might look slightly mediocre to their peers. They seem to be more relaxed, less busy, and with a predilection for taking weird shit under their wings. Their doors are suspiciously open. They are suspiciously available to nobodies. The phalanx running interference around their schedule is weak. They go AWOL and play hooky often.
62/ Yet, they aren't ineffective but unreasonably effective. Instead of getting to the C-suite through either theatrics or heroism, they seem to get there through being unreasonably lucky. With just enough frequency, every few years say, they seem to pull a rabbit out of a hat, and make a real difference. But they don't look like heroes.
63/ Occasionally, and very very rarely, if an existential threat and opportunity combine in a suitably urgent way, you might be able to skip the 2-stage capability launch (A: STRESS from CONTEMPT to CRISIS, and then B: ACTIVATION spiraling from CRISIS to EXCITEMENT), how?
64/ This is the C: LEAPFROG pathway directly from CONTEMPT to EXCITEMENT and the only known way to do this is through acquiring a mature capability from the outside, which means a relatively late-stage mid-sized startup with its own culture and inertia. This is again not steering. Rather, it is changing the momentum vector by creating a link to something moving in another direction.
65/ As with internal change efforts, acquisitions have an equally poor track record, perhaps worse. Most serious acquisitions that are not merely "talent" acquisitions (glorified recruitment t HR level) fail. The reasons are similar. An acquisition needs an attentive and mindful sponsor willing and able to get on the bet-the-far spiral. It's just faster because most of the spiral has already been traversed by the acquiree.
66/ Anyhow, this is what executive sponsorship means, and this is how it actually propels organizations in new directions. It ain't easy, 50% will fail, mostly through backsliding to THEATER after a crisis or a straight hop via a bandwagon effect.
67/ So do you want to try and play this game, either as an executive sponsor or as a change agent? Well, do you feel unreasonably lucky, punk? Do you?
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