Speed is only one aspect of effective change
Michael Smets, Tim Morris and Andrew White, March 07, 2017
The S³ model focuses on the speed, scope, and significance of change actions
Cautionary tales against obsessing over speed, or what is ‘urgent’ rather than ‘important’, have been around for more than half a century. In 1954 president Dwight Eisenhower declared: “I have two kinds of problems: the urgent and the important. The urgent are not important, and the important are never urgent.”
While this adage is probably still useful as a basic principle to manage one’s workload, two things have fundamentally changed recently.
First, the two categories are by no means as dichotomous today as when Eisenhower presented them – at least in the minds of CEOs. In a time of hyper-competition, connectivity, and social media scrutiny, very important things may become very urgent and demand immediate action. Second, in an increasingly diverse world what is ‘important’ is unlikely to be a homogeneous category. A strategic move that one stakeholder welcomes may be resented by another. While one ‘important’ issue may be dealt with at a strategic or operational level, another may require a profound shift in culture. Hence, we urgently need to get a better handle on what is important both for the organisation and the executives.
Our research for The CEO Report, in partnership with Heidrick & Struggles, has led us to think about this distinction in a different way. How do you define importance? Is something important because it is very big and systemic? Or is it important because it is of foundational significance for the organisation? How can you be sure that you are assessing the nature of an issue accurately while also determining how and when significant change will have an impact on the business?
The CEO Report is based on in-depth interviews with more than 150 CEOs, many of whom felt under pressure to respond faster to events: everything was ‘urgent’. The question that preoccupied them was how they could focus their energy and lead proactively when their environment pressured them to constantly – and instantly – respond to change. The key, our research suggests, is to focus not only on the speed of change but primarily on its scope and significance, as shown in our S³ model of change.
Interviewees told us of the pressure that today’s pace of change imposes on them, citing factors such as disruptive new competitors and new market channels, often digital. Many also suggested that social media contributes to driving a sense of urgency and pressure for increased transparency.
However, this sense of urgency can be deceptive. Depending on the sectors they work in, CEOs in our sample broadly fall into three categories. One individual, offering a healthy dose of scepticism, noted: “There is this mantra at the moment that change is faster than it’s ever been […] and I don’t really buy that.” Another cautioned that not all aspects of the business environment are changing at the same pace – or even changing at all. He pointed out that while his sector (banking) has faced substantial changes in many respects, its core principles remain the same. Others doubted that the amount of change we are going through is unusual. As one CEO suggested: “We have selective memory in the sense that we think we are living in the most turbulent times you can imagine.” However, there is plenty of evidence that any generation of leaders has always thought that they live in the most turbulent times ever. The key take-away is: whether you think change is faster than ever, it is selectively so, or not at all, and so speed is not the most meaningful dimension for thinking about change.
As well as understanding the true speed of change, it is important to also look at its scope – the size and extent to which a particular event or trend is far-reaching. The greater the scope the more likely it is to be important, simply because it affects the organisation in more ways or in more places.
Trends take different forms: for example, geopolitical upsets like the conflict in Ukraine; economic changes (for example in energy prices); or health threats such as the Zika virus. The impact of scope can be difficult to predict. Some changes may be more evidently systemic, such as the recent global financial crisis. Others may generate substantial attention but actually turn out to be more contained, with less impact. Critically, such judgements are not universally true. The same challenge may be contained for one organisation, but more systemic for another. The key is to continuously evaluate and re-evaluate what a particular trend means for your organisation, or if different parts of your business may be affected in different ways and therefore require different responses.
The final dimension of change is significance, which refers to how deeply any change affects the organisation.
Some changes will influence the business model, strategy, or operations of the business. We call these technical changes. They are important but not deeply disruptive. Other changes are more profound and foundational, challenging the organisation’s mission and core values. These are basically challenges that make staff question whether they joined the right company and external stakeholders wonder about its purpose and trustworthiness.
Sometimes something that looks like a purely technical decision can also have value-based implications that make it foundational. Cyber threats, for example, are likely to represent technical changes for most businesses but will be foundational for a smaller group, such as computer companies (though what may initially appear technical can quickly become foundational, as Sony’s recent experiences with cyber security suggest). Foundational changes often occur when stakeholders make demands on the business that cannot be ignored.
Many foundational changes are fuelled by ideological concerns, and that means they have a strong impact on the significance dimension of change.
Untangling scope and significance is vital. Seemingly large events may ultimately end up being relatively insignificant. Others may be small in scope but prove highly significant because they trigger concerns inside the business or among external interest groups, particularly when social media becomes an amplifier.
From research to reality
When we wrote The CEO Report we developed the S³ model as a way for CEOs to assess the possible impacts of external events and trends, such as geopolitical upsets, economic changes, and public health threats. With a more detailed understanding of these potential risks we thought CEOs could better prioritise, delegate, and allocate energy and resources. However, since we started sharing the model and using it when teaching senior executives, we have discovered that it is also a useful tool for educating staff and managing career trajectories at all levels.
Companies and individuals can use the S³ model to help delegate more effectively, understand better which issues need escalating and when, and frame projects and change initiatives.
When teaching executives we often use a simple exercise to start. We ask them to look at their diaries for a four-week period (the two weeks before the exercise and the two weeks after) and plot on the model where they spend most of their time. In other words, are they spending most of their time on things that are urgent or things that are important – and are the important things to do with scope or significance?
Typically we find that most people spend most of their time firefighting technical issues with a narrowly-contained footprint. We argue that CEOs should be concentrating on issues that are foundational and systemic, as well as the genuinely urgent. While it is important to know what’s going on in the rest of the organisation, they should not be spending too much of their time in the other three quadrants of the cube. These are jobs for delegation, and executives should use their authority to delegate and free their diary for the truly important questions, i.e. those of profound significance and systemic impact.
For other staff, middle managers and rising stars, the question should be ‘why do I find myself where I am?’ While CEOs should only spend a minimum of their time on technical issues of limited organisational impact, someone still needs to do this job. For those in more technical jobs a predominant allocation of their time to the bottom of their S³ cube is perfectly legitimate.
For others it is less so. They may find themselves there because colleagues rope them into firefighting, they are struggling to transition from a technical to a managerial role, or they retreat to a comfort zone of activities that keep them busy without making them productive. The key question in all cases – and of particular relevance for HR functions – is: are you being dragged into issues where you shouldn’t be, and are you being stretched too thinly by the organisation?
Another good reason to (critically) evaluate people’s allocation of time is to check for development potentials and trajectories. Basically, we need to look at individual staff and not only think about where they are, but also where they should go next. In this sense, it is not just the CEO who can end up spending too much time on technical issues. Individuals who are looking to develop their careers, and departments that wish to increase their influence, need to be involved in conversations at a strategic level. If this applies to you, you can do the same exercise and use the model to ask yourself if you’re in the right place in the cube, and if you’re there willingly. Where do you want to go next? What are the conversations you need to become part of to make that next step – do you want broader impact, or a more foundational challenge?
Turning the model on its head can be a useful way of helping to educate frontline staff and middle managers on how to recognise or anticipate impact and escalate accordingly.
Consider, for instance, Volkswagen’s high-profile manipulation of emissions controls on its diesel engine cars. To the people implementing these ‘defeat devices’ it must have looked like an engineering challenge – a purely technical change. Scoring relatively low on both the ‘scope’ and ‘significance’ scales, it would have appeared to inhabit a contained box in the back corner of the model.
But in fact the decision was a profound challenge to VW’s core values of responsibility and sustainability, making it foundational in significance, and definitely something that should have been on the CEO’s radar. This raises the question: at what point in making technical changes should they be escalated? In projects this is usually built into the project management system, but how do staff in large, complex organisations understand the triggers that should send decisions further up the chain of command?
In terms of scope there are clear signs, ironically especially so in a company that relies so heavily on sharing platforms and components. Where multiple products or product lines rely on the same platform any changes to a key component – such as a diesel engine – should ring alarm bells, because any problem here will ripple through multiple product lines, or even brands as in the case of VW’s other car divisions Audi, Skoda and Seat.
Significance is trickier to spot and harder to handle. It is important to communicate within the organisation that any issue, in any part of the business, which might be or clearly becomes foundational is a leadership issue. That involves creating a clear understanding of what foundational means, and empowering staff to speak up. Again, we believe that the S³ model could be a useful tool in training people to think about these issues throughout the organisation.
Michael Smets is associate professor of management and organisation studies at Saïd Business School. Tim Morris is professor of management studies at Saïd Business School. Andrew White is associate dean for executive education and corporate relations at Saïd Business School