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Managing Change in the Face of Skepticism

Augusto Giacoman

Augusto Giacoman advises companies on people and organizational issues for Strategy&, PwC’s strategy consulting business. He is a director with PwC US, based in New York.

 
Maureen Trantham

Maureen Trantham is a specialist in organizational issues with Strategy&. She is a director with PwC US, based in New York.

 

“If you suggest anything touchy-feely to our executives, you’ll get laughed out of the room,” the head of transformation warned us as we described our approach for using the organization’s culture to accelerate change. So began our systems and structural transformation effort at a skeptical, highly analytical financial-services firm.

Even though our practice of using culture to manage change had proven effective with hundreds of clients, our methods were about to be chewed up and spit out by these executives. Why? This client’s business was centered on finding information others missed using an analytically thorough methodology and critical thinking. The company thus had a strong culture of skepticism, necessary for its business but incompatible with our usual efforts. Phrases we usually used, such as “sources of pride” and “emotional energy,” were “too squishy” and abstract to be effective here.

Despite the shaky start, we won them over by adjusting our approach. First, we learned about the existing culture and the root of skepticism both toward the changes that needed to take place and toward our methods of using culture to facilitate those changes. Then, we appealed to the heart through the head with both rational and emotional cases for change. Last, we managed the change relentlessly and methodically.

Figuring Out the Culture

After our first meeting at the financial-services company, we set out to unearth the true nature of the organization’s wariness around cultural initiatives. We observed how employees at all levels interacted with one another and found that, in this organization, success was built on relentless challenging. Employees took great pride in asking thought-provoking questions, diving into data to understand and analyze it, and pushing past conventional wisdom to get to the right answer. Understanding how things really worked at this company and the culture of steadfast skepticism helped us use these sources of pride to draw in both program sponsors and the organization overall.

Since this project, we have found that many organizations with a similar analytical focus, especially those heavy on engineers, exhibit this same culture. For example, we recently worked with an aerospace and defense manufacturer that creates satellites that last for decades without needing repairs. In addition to maintaining rigorous operational standards, the company performs several layers of redundant quality checks. Each layer treats previous work with skepticism, double-checking for errors, and individual pride and metrics are tightly linked to zero defects. This approach reinforces a culture that helps employees do their jobs well — but workplace initiatives, including transformation programs, are met with a similar level of scrutiny.

To be sure, skepticism can play a positive role in organizations. It helps companies make better decisions. It can build tight trading algorithms and sturdy satellites. Doubting hockey-stick growth and suspicious data helps companies make better capital allocation choices. When skepticism is constructive, it can be leveraged to evaluate a change effort’s benefits, and build employee enthusiasm for it.

Cynicism is a different matter. It often stems from a history of failed programs or lack of management credibility. Cynicism breeds distrust and pessimism, so if it is present, transformation efforts must restore credibility before moving to the next step of the plan.

Regardless of an organization’s culture, business leaders should avoid strong-arming change — recent failed transformation efforts have shown the pitfalls of that approach. When leading a transformation in a skeptical culture, look within and leverage the skepticism to move forward.

Appealing to the Heart through the Head

In cases of highly analytical cultures, change efforts should appeal to emotions through logic and reasoning. Start with the facts and figures — these important elements of traditional change efforts are even more necessary with highly analytical cultures. Use data to explain why the change is important and why it has to happen now.

In cases of highly analytical cultures, change efforts should appeal to emotions through logic and reasoning.

For example, show how competitors are gaining market share or illustrate the effects of low growth on the stock price. Demonstrate the expected benefits and costs of the change. Analytical minds will internalize the data and build their own personal case for transformation. With our financial-services client, we unlocked powerful positive emotions by showing how key changes would allow analysts to reconnect with and do more of the parts of their jobs they liked. We made this case through facts and figures, but it resonated emotionally with analysts and engineers who had been bogged down for years by workarounds and inefficient processes.

Another rational appeal to the heart can come from success stories. Success stories are critical to change efforts, but they can be written off as propaganda in a highly analytical culture. Work with the organization to gather their “win” stories and their stories in which the initial vision or approach might have been flawed but was immediately and openly corrected. These homegrown “fast failure” stories help establish management’s credibility and dedication to learning and moving the change forward.

Skeptical cultures will also pounce on inconsistency. After all, consistency is how the people who are at home in this culture make the planes, trains, and valuations work. Methodical planning and follow-through are vital in change efforts. As former GE CEO Jack Welch advised his leaders: Be “relentless and boring” in managing change.

With our financial-services client, we established a communications schedule early and made sure to hit every deadline, building credibility along the way. Our messaging led with the facts and explained how the transformation would benefit employees’ day-to-day work, which we learned about by engaging with and listening to authentic informal leaders, or employees who may not hold formal authority, but possess and exhibit certain leadership strengths and an in-depth knowledge of how the organization operates. We held town halls to give all employees the space to do what they were proud of: asking challenging questions to understand why and how the organization was transforming.

Managing the Change

The final steps to managing transformation in a skeptical culture are to determine how you’ll measure progress and success, and to remain flexible so you can adjust course based on the findings. Choose a few key metrics that will indicate whether people are adopting the behaviors and will help assess if the behaviors are having the desired impact on strategic and operational goals.

After a rocky introduction to our client, we designed and delivered a change-management program that transformed its business, streamlining costs by 20 percent and significantly improving decision rights and information flows.

It can seem daunting to get analytically minded employees to support a transformation. But by following the steps we’ve laid out here, even the most skeptical organizations can be persuaded to embrace change.

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Managing Change in the Face of Skepticism