This article by Finn Jackson is the first in a series examining the future of leadership in a changing world. It considers how change happens in organisations and how we can make it happen better.

The organisation you work in was not always run the way it is today. A hundred years ago it would have been managed very differently.

The practical and philosophical foundations of modern management were laid down in the 1950s and 60s by Peter Drucker (“the father of modern management”) and consulting firms such as McKinsey and the Boston Consulting Group. The approaches they developed were designed for a world that was stable and growing. We no longer live in such a world.

In this series of articles we will search for ‘the future of leadership’: an approach explicitly designed for the volatile, complex, and uncertain economies we operate in today. As we do so we will uncover a series of practices that together generate personal growth, an abundant world, and competitive advantage for our organisations.

We start by understanding how to lead our organisations in a way that enables them not only to survive change but to actually become stronger because of change.

From ‘Coping with Change’ to ‘Thriving Because of Change’

We are living through a time of radical and accelerating change. The ability to manage that change is a top priority both for leaders and organisations: those who cannot manage change will fail; those who manage it well have competitive advantage.

The first priority for future leadership must be to enable our organisations not only to survive change but to use change to become stronger.

To understand how to achieve this, let’s look first at the way change happens in organisations. Then let’s look at how to make it happen better.

How Change Happens in Organisations

Change in any organisation follows a sequence of steps. These begin when someone notices a potential issue (or opportunity) and raises this to the organisation.

If the organisation agrees the issue is significant then it makes plans to address the matter. This is Step 2.

The third step is execution.

Together, these three simple steps define most organisational change programmes:

But the impacts of the change are not over yet.

The implementation of the change programme will have a psychological and emotional impact on all the people who are affected. Some of these impacts will be large and others small but they will reshape the world views of each affected person, either confirming what they knew already or teaching them something new. These effects are called transitions. Managing them is Step 4.

Then the next time these people find themselves in a situation where change might be needed (back to Step 1 again, via Arrow 5) they will use their new world views, and their experiences of what happened last time, to decide how they will respond: whether or not they will speak up and how they will do so.

Charting this process, from planning to execution, from individual to organisation, and back again, gives us the ‘Cycle of Leadership’. This is how change happens in organisations:

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Managing Change Happen Better

If we want to improve our organisation’s ability to handle change there are just two ways to do so: either we can improve the way we carry out each step or (better) we can close the loop.

To understand this, imagine an organisation that says one thing but does another. Perhaps it says it encourages risk-taking but actually only rewards people who meet their financial targets. Such an organisation might move successfully through the first three stages of change but will fail at the fourth and fifth to close the loop. Instead, people will learn from experience not to believe what they are told. This will make them less willing and able to address new issues (Steps 1 and 2) and more resistant to future changes (Steps 3 and 4). Over time, the organisation’s ability to respond to change will degrade.

Imagine, instead, an organisation that shows consistency in what it says and does. As a shorthand, suppose it defines its purpose and values, then actively applies them in its day-to-day operations and decision-making. Such an organisation closes the loop. What happens next is a kind of magic.

An organisation that lives in line with its stated purpose and values teaches its people by example. When new issues arise, this deeper understanding helps people know clearly and quickly which issues matter and which do not (Step 1). Their added clarity and confidence then helps people to create new plans (Step 2), implement them (Step 3), and handle their transitions (Step 4). In other words, by defining a set of purpose and values and acting consistently in line with them, the organisation increases its ability to change.

In a churning world, this brings competitive advantage.

At the end of each cycle the organisation then gets to update and reinforce its purpose and values, which makes it even stronger at identifying and addressing the next issue that arises.

 By acting consistently in line with a set of purpose and values the organisation switches from linear management to circular management. The organisation and its people become able not only to survive crises and change but actually become stronger because of them. They become what Nicholas Nassim Taleb calls ‘antifragile’.

Things that break under pressure we call ‘fragile’. Things that do not break under pressure we call ‘strong’, ‘robust’, or ‘resilient’. And things, people, and systems that actually become stronger when placed under pressure, Taleb calls ‘antifragile’.

In a time of change, this ability to use change to become stronger brings advantage to an organisation. This is why purpose and values matter: not because of any moral high ground but because in times of change they bring consistency, making leaders and their organisations more able to handle change.

This is the first building block of future leadership and it brings competitive advantage that becomes stronger with each challenge that arises.

We will return to purpose and values in the fifth article of this series. But for now our next step is to understand more clearly how to make Arrow 5 happen. For that we need to look more closely at Step 4, managing transitions. This is the focus of the next article.

This is the first in a series of articles examining the future of leadership in a changing world. Click here to view all of the articles in this series.

 

Finn Jackson is a consultant and coach who helps clients generate lasting solutions to issues of strategy, leadership, and change.

His first book, The Escher Cycle , was called “A unified theory of business” and “A blueprint for winning any game your business chooses to play.”

His second book, The Churning, Inner Leadership, has been called “The inspiring manual to improve our VUCAbility,” “A book which should be on every change-maker’s bookshelf,” and “an ethical framework for business decision makers, based on emotional maturity.”

 

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