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22 Sep

The clan is weakened, the predator attacks

Q&A with renowned thought leader and international best-selling author Dr John Kotter.

Before John Kotter’s seminal business book Leading Change in 1996, ‘change management’ could be described as a niche business term. In the years that followed, it became an entire industry and, in 2011, TIME magazine listed Leading Change as one of the ‘Top 25 Most Influential Business Management Books’ of all time.

Leadership and change are topics that Kotter, who in 1980 aged 33 became Harvard Business School’s youngest ever professor, has returned to many times in his 19 books to date, 12 of which were bestsellers. He also writes occasional pieces for Harvard Business Review, and his article ‘Accelerate!’, on how to stay competitive amid constant turbulence and disruption, won the 2012 McKinsey Award for management article of the year.

His latest title, however, is not a business book in the traditional sense. That’s Not How We Do It Here! is a short, illustrated story about meerkats. Faced with a changing habitat and the arrival of new predators, the community is confronted with the need to adapt and change, but is crippled by ingrained procedures and processes that stifle innovation. Sound familiar? It’s supposed to.

Kotter and co-author Holger Rathgeber describe it as a ‘modern parable’ for businesses operating in turbulent times, but it’s not the first time they have used animal allegories to convey ideas. Their first parable, 2006’s Our Iceberg is Melting, used a colony of penguins facing a similar predicament to examine fear of change and how to motivate people to act.

“Stories catch people’s attention emotionally,” says Kotter, a professor of leadership at Harvard and chairman of consulting firm Kotter International. “You leave ideas attached to those emotions, which affect behaviour.”

Here, he talks to journalist Tim Smedley about the power of storytelling, why change is happening faster than ever and how traditional businesses need to be more entrepreneurial.

Q: Why did you decide to move into fables, and animal allegory in particular?

JK: I am very interested in how people learn, and I’m increasingly interested in brain research. I’ve always been pretty good on my feet teaching or making speeches — I’ve never done it in a traditional ‘stand behind the podium with 35 slides’ style. I use stories, often with video, in dialogue and with lots of humour to engage the group. I learned a lot from doing that, and it led to the obvious question: what is the written equivalent of that?

When I met Spencer Johnson in the late 1990s [author of mice-based management tale Who Moved My Cheese?] we talked a lot about what parables are, when they work and what they do.

The brain is hard-wired for stories. It’s been a critical way to pass on knowledge going back tens of thousands of years. What we found with Iceberg is that it develops a common language that is easy to use and non-threatening. Some fundamental facts become easier for people to understand and act on. I received a lot of emails from people about how Iceberg changed their business, their church or their personal life. Managers were buying 10 copies and passing them out to their teams. We talked about doing ‘Iceberg 2’, but then we looked at meerkats.

Q: What’s the fundamental idea behind That’s Not How We Do It Here!?

JK: The difference between leadership and management. Holger was convinced from his work with management groups that this fundamental point remains massively misunderstood and gets in the way of everything. I started talking about it 20 years ago, but in the real world the confusion muddles conversations and is not helping to create enough leaders. To write another professional book would not be the solution. We decided this should be at the core of a fable.

Management is the way you operate and organise — it’s a set of processes. Management takes a system and makes it function. Leadership is about creating a vision and a strategy, and communicating that in an inspirational way. Leaders create the systems; managers make them function. You need both and you have to build an organisation that has both — but that’s not the way we learned to operate in the 20th century. With both you get twin advantages of reliability and efficiency, with the speed and agility you increasingly need in today’s world.

Q: Is change really happening faster than ever before? Haven’t we made the same claim about every era?

JK: That has been true to some degree over the past 200 years. But if you look at a chart of the number of patents filed at the US patent office, you get an exponential curve over the past 30 years — the number is almost doubling year on year. You find a similar upward trend all over the place: data, storage capacity, technology advances. We even did a study of the America’s Cup. It is striking how from 1850 to 1970 boat design and technology didn’t actually change that much. Now the boats look nothing like traditional boats, and average speed kicked up massively from the 1980s.

There’s no question that the number one factor is technology, but the second reason has been global integration. The more integrated things are, the more one event starts jerking everything else around. A little country of just a few million people can have a problem that affects the entire world, like Greece — that couldn’t happen 100 years ago.

The more you take integrated systems and make them tightly, mutually dependent, the more change you get, because every time something moves it affects everything else in ways that are hard to predict. You put technology and global integration together and that creates more and more change. We are struggling to figure out how to build governments and companies that can deal with the size and speed of those changes.

Q: Only 12% of Fortune 500 companies in 1955 were still there 60 years later. Are we equipped to deal with such rapid turnover?

JK: Economist Joseph Schumpeter coined the term ‘creative destruction’ in the 1930s to describe how old firms begin to stagnate and shrink, and then new guys come along who win for a while and then get destroyed. Capitalism has always done that to some degree, but it is more so now than ever.

Part of the struggle going on right now, from a societal point of view, is that we just don’t know how to make labour markets fluid enough to deal with the current rate of change. When a steel mill goes down, we don’t really have good mechanisms in place to get those workers re-employed within a reasonable amount of time and on a good wage. For sure they are not going to work for a high-tech start-up. The technology would call for complete retraining, and their wages — at least initially — would drop.

The labour market is not fluid enough to handle the churn of the ‘business success market’, if you will. We are leaving some people behind who are now getting frustrated enough and mad enough that their voices are being heard — but that’s a whole different discussion.

Q: Some people argue that we need to be increasingly specialist to compete with the robots. Do you agree?

JK: What we have found in our work, and is represented to a degree in our meerkats story, is you need both generalists and specialists. The problem is, the current way we organise [businesses] emphasises the narrowness in a specialism. It doesn’t give people the opportunity to work on broader initiatives. The technologist doesn’t have the opportunity to work with the sales guys or the finance people, or ever develop any appreciation for what running a business is all about.

We have found a way to open up that possibility, and to help give some speed and agility to organisations, by forming cross-discipline teams. We need to start developing people who are not just super-specialist, but have broader perspectives. Of the people who do exist in very specialist boxes, there are some who find them boring and meaningless. When you open up the opportunity for them to step outside that box, they will grab it with both hands, find it really exciting and develop skills that are useful to them and to the company.

Q: Can businesses become better at adapting to change without losing the practices that made them successful in the first place?

JK: The answer is to approach the issue not as an ‘or’ but as an ‘and’. People get into the ‘or’ all the time: ‘Bureaucracy has to be shut down’; ‘We need to run more like a high-tech start-up.’ What gives you the capacity for innovation is to take the best aspects of scaled organisations that produce high-quality products and services reliably and efficiently, and combine them with something that is more entrepreneurial, that can give you agility and speed.

Everyone is trying to do that by appointing ‘innovation committees’. Or they hire consultants to come in and do the innovation for them — that doesn’t work either. Or they try and buy it: the big company buys the small high-tech company to get the innovation, and over the next 10 years of integration it systematically kills the acquisition.

Q: What is wrong with the concept of an innovation committee?

JK: Committees tend to be appointed, and the difference between ‘want to’ and ‘have to’ is huge. Also, the committees I’ve seen tend to be more ideas machines than execution machines. Ideas machines just clog up senior management with more stuff that they then have to sort through. Often they can’t and don’t and, even if they do execute the idea, they do so through the traditionally organisational bureaucracy that doesn’t have the speed needed to take advantage of an opportunity.

Q: So how can businesses maintain their traditional advantages while becoming more entrepreneurial?

JK: There are a few principles you can follow to do this. The number of people traditionally involved in strategic initiatives is woefully small. The name of the game, if you want to change an organisation to take advantage of new opportunities and avoid any hazards, is to multiply your team by 10. You need to put many more people in a position to be change agents. Don’t hire them. They’ve got to be internal employees and they’ve got to want to do it. What they are doing is not project management, but providing the leadership and entrepreneurship that you find in successful start-ups, and they are doing so through a structure that looks much more like a start-up than a mature one. Think of it as a second, entrepreneurial organisation glued to the old organisation. It has to be able to execute ideas.

You will find differences in the detail and context; each setting and industry is different, but the principles remain the same. Smart people who get into this intellectually and emotionally will want to figure out the answer — they just need some guidance about the basics and an example or two. And we’ve given them one example that is kind of fun to read and relate to, and that also gives them a way to start a discussion and get some action going.

This interview was first published in the Autumn 2016 issue of CIPD’s Work. magazine.

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