When companies need to make transformational changes to their business operations, the first move is frequently for the CEO to bring everyone together and announce a sharp, swift change of direction. This approach is jarring. It scares people. For many middle and lower managers and highly valued individual contributors, the announcement of transformational change is often perceived as placing jobs at risk.
But there is an alternative.
Companies can still get the type of disruptive innovation they need to survive and create lasting change, without moving fast and breaking things. This can be achieved by building momentum for change incrementally. It’s not a new approach, but it can get overlooked when a sense of urgency arises and appears to dictate swift action.
The first example I came across of how to build incremental momentum for transformational change dates back more than a century, when time could be measured in months, if not years, rather than nanoseconds. In Audacious Goals, Remarkable Results: How an Explorer, an Engineer and a Statesman Shaped Our Modern World, historian David Hirzel and I tell the story of how over the course of a decade, Theodore Roosevelt preserved 230 million acres in the United States—more than the combined landmass of France and Germany—in what we know today as the National Park Service.
He started small. In 1903, he established Pelican Island, a three-acre bird-breeding refuge off the east coast of Florida, as the first federal bird reservation. In the ensuing years, Congress passed a variety of incrementally stronger laws, which protected forests, land, habitats, areas of spectacular scenery, and ancient historical locations. By the end of his presidency in 1909, Roosevelt had created or enlarged 150 national forests, protected more than 50 bird habitats, and established six national parks and 18 national monuments. By starting small, Roosevelt built momentum for conservation on a grand scale.
Companies can get the type of disruptive innovation they need to survive, without moving fast and breaking things. This can be achieved by building momentum for change incrementally.
Roosevelt’s success would never have occurred had he announced that he was going to preserve enormous tracts of land across the US and was simultaneously going to put in motion mechanisms for future presidents to do the same. It would have upset miners, oil drillers, and loggers, as well as all industries that depended on them. Congress would never have approved it. By acting incrementally, Roosevelt gained buy-in as the value of preservation became apparent.
Incremental momentum has been successfully used in other endeavors. Almost 120 years after Roosevelt’s work, a team of environmental scientists in Finland surveyed the success of incremental change in achieving the country’s sustainability goals. They concluded: “The strengths of small wins include the ability to react to the constantly changing, dynamic conditions…and to deepen trust, commitment and understanding among people.” The report continued, small wins “can facilitate progress and interfere with old routines by bringing about small steps that may result in continuous transformational change and generate radical changes in the long run.”
For example, in 2018, the Finnish government, rather than mandating people cut their emissions, made available a tool to help people calculate their carbon footprint. By 2021, more than 1 million people, approximately one-fifth of the nation’s population, had used it to assess their impact on the planet. Along with other incremental measures, this helped Finland increase its score and remain at the top of the Sustainable Development Goals Index.
The strategy can work in business too.
SAP, the German-based software company, took an incremental approach to shift its customer base from mainframe computers to the cloud on a timeline similar to Roosevelt’s. A decade ago, it realized that competitors were eating into its market for enterprise software solutions and that the company’s market share would be overtaken by cloud-based rivals. But to transition to the cloud too quickly, when over 99% of its worldwide revenue came from SAP software running directly on large systems, would have choked sales and crushed shareholder and customer confidence.
The risks were great. The SAP executive team had to balance putting effort into building cloud solutions with maintaining engineering support for the ERP system innovations that its customers relied on. Having worked for the company during that time, I observed firsthand how incremental momentum was used to craft a winning solution.
SAP started by building cloud-based software specifically for small organizations, a market previously underserved by the company. SAP also aligned with partner companies that specialized in cloud solutions, collaborating to solve their customers’ problems. SAP then acquired smaller cloud-based software suppliers, such as Callidus Software and SuccessFactors.
Momentum grew from all of those incremental successes. In 2012, SAP cloud software revenues were US$17 million, 0.15% of total annual revenues at the time. Today, with SAP’s worldwide revenues having more than doubled in size, the company’s cloud revenues reach almost US$10 billion, representing more than 34% of total revenue.
Analysis using data from PwC’s 25th Annual Global CEO Survey showed the power of incremental momentum in business performance. Based on a survey of 4,446 CEOs, the researchers found, for example, that smaller, lower risk acquisitions that are undertaken on a more frequent basis yield a significant performance edge. The benefit comes from the power and learnings gleaned from incremental activities, such as a series of small acquisitions that can lead to a bigger overall result. This is in contrast to the ‘big bang’ headline-grabbing mergers and acquisitions, which may not produce the desired benefit.
The electric car market is a case in point. One key challenge a decade ago was whether there were enough charging stations in the right locations that electric car owners would feel secure they could reach long-distance destinations. A charging network wasn’t created overnight. At my local Sainsbury’s supermarket outside London, the firm built 20 electric charging bays in 2012. These sat unused for years because no one had pure electric plug-in cars. As confidence grew, charging bays began appearing in more places and, because of this, production of the cars also increased. There are now more than 500,000 pure electric vehicles (not hybrids) in the United Kingdom.
When Theodore Roosevelt issued the protection order to establish Pelican Island as the first federal bird reservation, he did not realize the momentum it would generate. The National Wildlife Refuge System has grown tenfold since Roosevelt first created the blueprint. At a time when business practices and models are being upended by new technologies that threaten legacy systems and customer bases, leaders would do well to consider an incremental approach to drive change, rather than the big announcement approach. Incrementalism is a proven way to simultaneously build momentum and test proof of concept while reducing stress, churn, and disruption in your organization.
- Brad Borkan is the coauthor of two books, When Your Life Depends on It: Extreme Decision Making Lessons from the Antarctic and Audacious Goals, Remarkable Results: How an Explorer, an Engineer, and a Statesman Shaped Our Modern World. A former senior director at leading high-tech companies, he is a fellow of the Royal Geographical Society, Vice Chair of the Friends of the Scott Polar Research Institute, and a member of the Society of Authors.