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  Leading Change: Direction amidst complexity.   

‘Progress, far from consisting in change, depends on retentiveness. When change is absolute there remains no being to improve and no direction is set for possible improvement: and when experience is not retained, as among savages, infancy is perpetual. Those who cannot remember the past are condemned to repeat it.’ 
 
George Santayana 
 
Article by Footdown Director Mike Carter 
 
In the last few years successful organisations including; the BBC, News of the World and the Co-operative Bank were engulfed by crisis, they were surprised by what they had to deal with, either because there was a break in expectations that came from situations that were not anticipated or situations did not advance as planned. Either way, leaders struggled to make sense of them. 
 
Organisations have to be capable of ‘managing the unexpected’ by engaging in innovation through organisational change. Against such a background leaders are exhorted to innovate in order to stay abreast of what is happening and to engage in the practice of leading change. So what are the implications of this for practitioners, not least for developing relevant compass bearings to find direction in this contemporary landscape? With this in mind, we shall address Santayana’s two assertions: that progress depends as much on continuity as change; and the inherent dialectic, that we should hold the past as both guide and warning to the future. 
 
We propose that innovation is not merely a set of ideas that can be borrowed from different organisational contexts and superimposed on a passive audience. Rather, innovation is the complement to organisation change articulated through the practice of leadership and the engagement and alignment of people. 
 
The organisational lifecycle model of change (figure 1) captures the story of life, i.e. we are born, we wax and we wane. In order to intervene positively to prevent the inevitable decline we ask where is the right place to change and start a second upward curve? When we are in the ‘failing stage’ with limited time and resources to effect a rescue plan or ‘successful stage’ when we do have the time, resources and energy? This would seem obvious, were it not for the fact that at the ‘successful stage’ all the messages coming through to the individual or the organisation are that everything is going fine, that it would be folly to change when the current recipes are working so well. All that we know of change, be it personal change or change in organisations, tells that the real energy for change only comes when you are looking disaster in the face. It gives rise to the false and, potentially, devastating aphorism: ‘If it ain’t broke don’t fix it’ 
The performance curve
(Fig. 1) 
 
The idea that we should change during success but actually only do change during crisis captures the history of organisational change and its practice. It also points to the dilemma that is facing contemporary organisations, which is that if you wait until crisis before you begin to change in our complex and dynamic world, you are likely to be too late. A popular way of expressing this idea that people only change when they ‘feel the heat’ is found in the expression ‘the burning platform’, a phrase much used by consultants. This is consistent with the need of ‘an emotional stir-up’ as a means of disturbing the equilibrium of the status quo. That is, to get change started you have to overcome inertia, defined as the inability of the organisation to change as rapidly as the environment. In essence, an inertial understanding of change says than until a gap becomes apparent between the organisation and the environment that is sufficiently wide to generate a sense of urgency / burning platform, there is little or no motivation to change. 
 
Thus there are two types of change; continuous change which is on-going, evolving and incremental change, to be found when an organisation is ‘in fit’ (the successful stage) with its ambitions and has the time and resources and transformational change that is discontinuous and revolutionary or when an organisation is ‘out of fit’ with its ambitions (the failing stage) and there is little time or resource. Each form evokes different responses and triggers for bringing about change. Historically, transformational change has dominated and it is brought about by a growing realisation, or gap with the environment, usually in the form of lapses in performance that trigger radical thinking and change. This is reactive change and the risk is that in complex, dynamic and unpredictable environments that there will not be time available to catch up with the environment – to close the gap – before failure. The other type of change is continuous or evolutionary it happens in anticipation of events, is motivated by curiosity and asking searching questions, and involves incremental innovative changes that are cumulative. 
 
It is when an organisation is out of balance, out of joint with its environment, that changes need to take place in organisation design and associated behaviours. This is especially difficult for successful, organisations that have ritualised success by building structures and behaviours designed to retain that success. Growing issues are not apparent (why change a winning formula?) because they are not believed, and therefore not seen. 
 
Perhaps not surprisingly, few organisations change ahead of the curve and before they become over-reliant on existing success, as it requires exceptional, innovative leadership and organising to even think about change on the left-hand side of the curve, let alone to pull it off. This gives rise to the need for leaders to consider an alternative to the aphorism: rather than, ‘if it ain’t broke, don’t fix it’, this might instead be that ‘if it ain’t broke fix it – it’s the only time you’ve got’. This proposition is problematic because, without the benefit of hindsight, knowing where you are on the curve remains unknown. 
 
Using foresight rather than hindsight means leaders need to use all the resources available to them and this means the intelligence and ability of their people through whose talents opportunities and threats can be identified, communicated and acted upon. Knowing what and when it is right to change is the holy grail of managers the world over. 
 
A ‘smart strategy’ for sustained innovation, that bridges both concepts of change needs more than good design, it requires active disturbance at a strategic level that builds behavioural repertoires to maintain active search and flexible response over a sustained period of time. It needs an organisational narrative that, accurately captures external events, culture, purpose and direction, the process of making it happen and the end results. ‘If we do not know where we are, then any direction will do’, and that is simply not good enough. Get it right and the organisation can avoid the either/or polarisation of slow emergent change or transformative change born out of crisis that is articulated here. 
 
The effective leadership of change does not reply upon universal recipes, rather it functions more as the taking of a series of compass bearings providing direction in a world, the shape and direction of which, is still emerging. Amidst this complexity, we conclude that effective leadership requires a skilful ability to remember the past without being a slave to it, whilst being open to the shock of a new order that owes little to the past.