3 Ways to Lead Through ‘Black Swan’ Changes
Black swans conjure up an image of large, black water birds with luminous red beaks. While their natural habitat is southern Australia they have become popular ornamental exports that can be found in water parks throughout Western Europe and especially Britain. They don’t sound like something we would want to avoid.
The term black swans was used in 2001 by Nassim Nicholas Taleb to describe financial events. His 2007 book titled The Black Swan extended the idea beyond financial markets and today it is a term commonly used in risk management. Black swans are seen as events that are impossible to imagine as we’ve known nothing like it in the past. Far outside the realm of regular expectations, they also carry an extreme impact. The advent of the internet serves as a good example. Again, an interesting notion but nothing we would necessarily want to avoid.
In 2012, McKinsey collaborated with the University of Oxford researching success rates of IT projects. They looked at 5400 large scale projects, across all industries, each with an initial cost in excess of $15 million. Their findings determined on average, 45% ran over budget, 7% ran over time and 56% delivered less value than promised. While these numbers are certainly unsettling, this wasn’t the most interesting fact they uncovered – and this is where black swans come into the picture. Their findings showed 17% of large-scale IT projects fail so badly they threaten the very existence of the organization. These black swan projects end up with budget overruns exceeding 200%, up to 400% in some extreme cases.
The average findings from this research is bad enough. There is little doubt the black swan projects are definitely something to be avoided at all costs. While the McKinsey/Oxford study looked only at large scale IT projects, there is a strong resemblance in these findings to the success rates for all types of changes. The black swan events end up being major disasters that can cripple an organization for a long time if not trigger their demise.
The challenge is to avoid these black swan events in the first place. While there is a long list of things that can be done to avoid black swans, there are three critical ones. They have to do with the missing ingredient in most failed changes – competent change leadership:
1. Executive Ownership of a Rock Solid Strategic Foundation
All too often, executives in changing organizations take the role of sponsor rather than owner. Sponsors make the decision to change, appoint the project leader and establish the overall outcome, timelines, and budget. They all too often take their hands off the steering wheel once this is done. They expect the project team to lead the organization to the promised land. Ownership means everyone in the organization clearly understands the highest level of power and authority is in charge and holding everyone, themselves included, accountable for the success of the change.
A rock solid strategic foundation on which any major change must stand are honest answers to three essential questions:
- Why is this change necessary at this time?
- What is at stake if we don’t change or fail in our attempts?
- What is the outcome we seek?
Whether this is a vision driven change (essential to getting us where we want to go) or a mission-driven change (essential to our current survival), this strategic foundation or business case must consist of a realistic sense of urgency and a compelling sense of hope that is continually used as a reminder when the going gets tough.
2. Project Mastery
Project management is something most organizations have dramatically improved in recent decades. Yet a few key elements still need attention. Project teams must be a strong blend of internal people representative of the whole system being impacted by the change and highly skilled external expertise with in-depth knowledge of the technical aspects of the change being implemented.
Rigorous attention to disciplined project management practices are crucial. Clearly establishing the scope of the initiative, ensuring all stakeholders sign off and ensuring requirements for change requests are unambiguous are just a few ways to ensure the project doesn’t devolve into a black swan.
Project teams must fulfill both sides of their mandate: a) develop the plan and b) help increase the willingness and ability of everyone involved to implement the plan successfully. Most project teams significantly underestimate the effort required to honor the critically important second side of their work. A major factor in fulfilling that engagement factor is the project teams’ vital role in communication.
Large projects often lose focus when stretched over long time lines. It is best to break large scale efforts into short, tight time frames with constant quality checks along the way.
3. Diligent Attention to Transition
Transition is the internal reorientation that takes place inside individuals, teams, divisions and whole organization when something external changes. This process of adapting to the event flows through three phases: separation away from the old way of doing things, navigating through the time in between when the old habits are no longer appropriate yet the new ways have not yet fully taken shape and integrationwhere the new way of doing things becomes common practice by everyone involved. Ensuring everyone gets through transition requires strong, capable leadership.
Perhaps the most crucial aspect of leading people through transition is to clearly spell out what is over and what will remain constant. It is especially important that information comes directly from the senior executives and is clearly connected back to the strategic foundation. Many changes fail miserably when everyone makes their own decisions on what to stop doing, if they stop doing anything, which usually leads to disaster.
Leaders at all levels must do everything they can to ensure there is a high level of trust everywhere. Ensuring the decision-making process is as visible as possible, clearly explaining delays, showing up just to listen to how folks are doing are all ways to keep the trust level high.
Ensuring the necessary supports for learning and innovation are in place is equally important. Using a variety of approaches (e-learning, one-on-one coaching, workshops) for learning the new processes and skills is essential. Don’t expect everyone to figure the new stuff out on their own.
Several things can be done to ensure the new way of doing things is fully integrated. Make certain everyone knows what they have to do differently, hold everyone accountable for the desired results and clearly align rewards with results are all keys to successful integration.
Every organization has experience with failed change. The loss of time and money, the missed opportunities and the frustration felt by everyone involved are definitely things to avoid. Black swan changes are gut wrenching and usually devastating. There is no letup in sight for the pace and complexity of change. Paying attention to the three aspects of leading change outlined here will help avoid future black swan events in your organization. Put them to good use today.
Copyright 2017 Chris Edgelow, Sundance Consulting Inc.