Managing Marketing: The disruptive effect of change on organisations

Managing Marketing is a podcast hosted by TrinityP3 Founder and Global CEO, Darren Woolley. Each podcast is a conversation with a thought-leader, professional or practitioner of marketing and communications on the issues, insights and opportunities in the marketing management category. Ideal for marketers, advertisers, media and commercial communications professionals.

Ashton Bishop, CEO of Step Change returns to Managing Marketing to talk with Darren on the relentless pace of change and the impact on categories, organisations and their marketing. They explore the drivers, the effect of change fatigue and explore the benefits of embracing change and the opportunities it creates on a personal and organisational level.

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You can listen to the podcast here:

Transcription:

Darren:

Welcome to Managing Marketing and this week I’m joined by Ashton Bishop who is the CEO of Step Change, formally Step Change Marketing.  Welcome, Ashton!

Ashton:

Thank you Darren.

Darren:

Now, it’s really interesting and one of the reasons I wanted to get you back, because you were here previously with your business partner Jeff Cooper, but I saw a video that you guys produced about the change of Step Change Marketing to Step Change.

Ashton:

Yes.

Darren:

And the focus on change.

Ashton:

Yep.

Darren: 

And so I wanted to spend some time with you, having a chat about the insights behind change.

People struggle with change

Ashton:

Yeah. We had our own little change as you pointed out Darren where we dropped the “Marketing” off the name to really represent the coming together and the confluence of strategy, marketing and leadership where things acting in isolation have become less effective.

So trying to thread those things together and give organisations a sense of direction in these tumultuous times was really the change we really needed to make to support our clients.

Darren:

Yeah because we do live in a time, it becomes almost glib to say change is inevitable, but we do live in a time where change is ubiquitous, everywhere there is change and what I’m seeing is that so many people struggle with change, even though they’ll chant mantras about, “Bring on change, change is good”, and all that sort of thing.

Why do you think this struggle exists?

Ashton:

Well, it’s difficult to deal with it and I’ve got some FMEFs for you today.

Darren:

Yep. FMEFs, I know what they are.

Ashton:

Yeah, okay.  As long as the audience do as well, so we looked at some Cisco research set at 2014, 40% of the Fortune 500 companies will not exist in ten years’ time.

Darren:

Yeah.

Ashton:

So at a company level, there is massive change.  When you look at people coming through and employees, the stat of 65% of children entering primary school, our children of today, 65% will be employed in jobs that don’t exist currently.

Darren:

Yep, I’ve heard these.

Ashton:

Yeah. And the one that ties it together was that Tony Scheiber quote that basically said, “Over the next ten to fifteen years, every industry will be disrupted”, so we are looking at a cataclysmic amount of change given human history.

So we’ve had 270,000 evolutionary cycles that have got us here today, but the amount of change and our ability to adapt to that is going to test us as individuals and as companies and also the systems and processes and ways of business that we’ve used in the past.

So across all of those levels, the tensions and pressures are like never before, but the opportunity is like never before.

Darren:

But Ashton, all those stats just tell me the tsunami is upon us, why do people still insist on sitting there like King Canute and say, “Hold back the tide, hold back the tide”, when it’s here?  I mean, isn’t resisting change or this constant struggle with change actually pointless or futile?

Ashton:

We’re fighting our evolution Darren. Across those 270,000 evolutionary cycles, we’ve sought certainty. We actually want to reduce our brains’ usage so people aren’t stupid, they’re lazy and they’re lazy because it used to be smart to conserve energy.

So the brain, 2% of our body mass, 20% of our energy consumption, we look for certainty and if you look at the change that hit the software industry and I think that’s almost the canary in the mine for the way that businesses need to adapt.

Remember we said there was people, organisations and then systems and structures.  The transition from the waterfall planning method of gant charts and we’ll do this and then we’ll do that, then we’ll do this and we’ll plan everything out over five years assuming nothing changes, through to the scrum methodology which is basically the lean principles and the agile principles of test, learn, refine, repeat.

We’ve seen that sector move.  I think the rest of the sectors need to move as well. So to answer your question of why fight it, it’s not about fighting it, it’s about looking for certainty and in the absence of the thinking system on ways to adapt, people go into that limbic response, the human response of the four Fs; fight, resist it, flight,

Darren:

Run away.

Ashton:

Freeze and reproduction.  So the four Fs sort of tend to be the limited responses. So we just need better thinking and better responses to what’s going on.

Darren:

And look, there is a lot of evidence that in mammals, as animals and human beings age, they actually shut down options and choices as a way of coping with life.

Ashton:

Yeah.

Darren:

This is why we see teenagers and young adults exploring lots of possibilities. They are also where the Darwin Awards come from with people exploring those possibilities taking themselves out of the gene pool.

Ashton:

Yeah.

Darren:

But in a way, with the pace of change it’s being driven by the technology age.

Ashton:

Yes.

Darren:

That pace of change is what’s actually working counter to our evolutionary development. People stop listening to new music at a certain age, if you haven’t got a tattoo by a certain age, you’ll most likely never get one.

These are the things that are inborn into us as mammals to protect us and supposedly increase our chance. But when change is so prevalent, we need to find coping mechanisms to be able to deal with that. So you personally and with Jeff and your business, how do you manage change?

Ashton:

Well, as you quite rightly pointed out with the mammal fear response, I think it comes from a world where the world was out to get us, one of my favourite quotes is from Norbert Weiner, one of the cybernetics guys and he said, “It is the greatest victory to have lived, to live and to continue living in a world that seems so indifferent to our mere existence”.

Darren:

Yeah, that’s great.

The three core sources of change

Ashton:

So we’re actually playing in a world where we think everything’s out to get us but if we flip from the out to get us side which isn’t helpful because we don’t think well with the cortisol reactive loop, it’s not very effective.

Whereas, with the dopamine opportunity loop, if we start looking at change as opportunity, we become more effective as thinkers. So the first part of our model or thinking approach really looks and says, “Identify the source of change”. And that’s the first question and I think it’s a really great question that people step over and we’ve identified three core sources of change.

Darren:

Yep.

Ashton:

Being aware of those is the first bit that gets our neocortex and frontal cortex to start analysing. So we want to analyse and observe first. So source of change, so adapting to external market conditions and changes, that’s the obvious one that we see.

The second one is internal refocusing. So has the business needed to make strategic decisions? So are we merging, acquiring, refocusing or changing our offering there? So that’s a trigger for change.

And then, probably the one that gets ignored the most is accommodating business scale. So there’s a whole lot of documented research around business doesn’t grow in linear patterns, it has basically black holes across an exponential and logarithmic path.

Darren:

Peaks and troughs, peaks and troughs.

Ashton:

Yeah, absolutely. And you look at some, and you think about rates of change, you take your business like at Lassian for example, I think over the last five years, 40% compound growth year on year. The systems, the processes and the people you know, that rate of change is far, far greater than the external environment.

Darren:

Because in some ways, and I’m happy to admit this, we’re a small to medium enterprise at TrinityP3 and I think Step Change is probably a larger business than ours, but there is an advantage, isn’t there as a leadership role in that, in that it’s easier to move a group of people.

When you scale that up to very large organisations of thousands of people, the delay, the lag effect of change is incredibly difficult to manage, isn’t it?

The larger the business, the more difficult the change process

Ashton:

Oh yeah.

Darren:

The nimbleness disappears.

Ashton:

Being a parent, I think the little snapshot of you have one child, then you have two children, it isn’t incremental, it’s exponential complexity. So things change back and you get economies of scale at a certain point where the children start to manage each other but I think you’re quite righ.

With us being a small to medium size enterprise ourselves, we actually spend most of our time coaching and developing the larger organisations because their ability to respond to change and the difficulties around that, I mean, that’s where all the case studies come from. So the innovator’s dilemma at Christianson’s work actually looks at the double bind large organisations often find themselves in.

Darren:

Well yeah, because we work for very large organisations, like yourself, but you work across a range, don’t you, from medium to large? And when I talk about, because the thing that drives innovation for us is curiosity.

Ashton:

Yes.

Darren:

And you know, it’s the idea of encouraging people to be curious to understand how things are working, how things are changing and what are the opportunities that come out of that?

And when I talk about it with our clients at large organisations, they look at me aghast, they go, “Oh my God, I don’t want a thousand curious people, because I’ll end up with a thousand curious ideas that again, potentially take the company in multiple directions”.

Creating the right culture

Ashton:

There’s that fascinating thing that you’ve just tapped on there, Darren which is this discretionary effort.

Darren:

Oh, okay.

Ashton:

So what happens there is for an organisation to scale and be effective and get size, it needs compliance within guardrails. If an organisation can’t do that, it can’t scale and effectively it crumbles.

But an organisation that is able to scale with compliance within guardrails but then has the discretionary effort for people to think, respond and behave outside those guardrails, is when organisations become great.

And we see organisations that work very hard to that so, scrum methodology we were talking about before, it looks at empowering teams and people. So Netflix for example is famous for their culture book that as they scaled and grew, they had less control and less oversight and actually empowered people to be adults.

Darren:

Ash, we call that frame working. So we define the organisations as having a framework or creating frameworks for them so that, the beauty of a framework is that you can build on any side of a framework.

Ashton:

Yes.

Darren:

It ultimately builds in the direction that the frame takes you but it allows out-pouchings, like extensions. You called it discretionary effort. But only to the point that it becomes unsupported.

Ashton:

Yep.

Darren:

Right, so suddenly if there’s a new out-pouching, a new direction coming off the framework, the decision then for the organisation is, “Do we build a new framework to support that because we see the positive aspects of it, or, do we not and we focus on our core so that it ultimately will just collapse under its own lack of momentum and support?”

I think for me it’s a really interesting way of thinking about it because what change then becomes is the building of the framework to a strategic requirement.

Ashton:

Yeah, there’s some wonderful factors in play and just when you were explaining that, I don’t know if you saw it growing up, but ‘Fraggle Rock’, the TV show, I had visions of the dozers.

Darren:

Yeah, exactly.

Ashton:

And the Fraggles being the external force of change of where they focus. But one thing that works with frameworks is obviously people.

Darren:

Yep.

Stay true to your core purpose

Ashton:

I think when we’ve talked about different ages of industrialisation and progression from the agricultural age, industrial age, information age, I think funnily enough, and one of the conversations that organisations have not had now there is thought leaders out there progressing, I think we’re into the resilience age.

One of the beautiful things when you talk about core and direction is if we think that core business versus core purpose, they’re actually different things and if we start to pull those apart and say, “If we remain fixed around core business, we won’t survive. If we remain true to core purpose, we then have a chance”.

Darren:

Well the prime example that immediately comes to mind is Kodak.

Ashton:

Yes.

Darren:

Okay, the core business was film. The core purpose was capturing memories, you know, and being able to keep those memories alive and they lost direction because they supported the core business; film, film, film, film.

They developed huge amounts of patterns for digital technology but largely missed the boat, ended up selling them off. Interestingly, they’re making a comeback in the film space because everything old is new again but I think the trouble that they got into three or four, five, years ago, was because they mixed up purpose and business as the driver.

Ashton:

And just to loop back around, one of the beautiful things you talked about shelving was that people’s view gets narrower as they get older. One of the things that was underpinning the failure around observing that was, one of the human heuristics of confirmation bias of wanting to see what we want to see.

Darren:

Yep.

Ashton:

Yeah? So we don’t have what we want, we want what we have.

Darren:

We ask the questions that we know will get the answers to support our position rather than asking the questions that are potentially going to put our assumptions under a cloud or under the microscope.

Ashton:

So I think it was about 1985, we have a piece of IP called the Smart Decision System which acknowledges the biases within human thinking and tries to use a decisions system rather than the intuitive gut feeling of analysis.

So this is work from Oliver Sivoni out of Sydney Uni who basically said, organisations that don’t have a decision making system, are six times less effective than organisations that do. So it’s a real question and one of those elements around the decision making system, it says, “Set triggers for appraisal”.

So Kodak did some work in I think the late 1980s and they said digital photography would never tip because the pixilation wouldn’t ever satisfy consumer needs and there was the cost of the camera and then there was the desire to hold prints. Now that was true at the time, they just never set reappraisal triggers to see, if pixel changes.

Darren:

Has the world caught up? Has technology surpassed the understanding? Because this goes back to the whole thing about, you can’t ask a consumer what they want in the future because they don’t know what they don’t know. It’s up to the company to identify the human behaviour, need or desire and bring the technology or the solution to bed to fulfil that need.

Ashton:

It was the Henry Ford quote, “If I’d asked consumers what they’d wanted, I would’ve built a faster horse”.

Constant change and change fatigue

Darren:

Yeah, absolutely. You know, we’ve seen organisations and we’ve worked with some recently that have gone through this constant evolution of change, but what I notice and they’re suffering change fatigue because people have four or five different business cards with different titles and they’ve only been there for a year or two.

Ashton:

Yeah.

Darren:

But what I’ve noticed is that a lot of these changes seem to be moving deck chairs on the Titanic.

Ashton:

Yeah.

Darren:

All that’s happening is that they’re moving clusters of people around and not actually realigning them to either a purpose or a business function or core.

Ashton:

Yeah.

Darren:

Have you seen that same sort of change fatigue, caused by superficial, not long term sustainable change?

Ashton:

Yeah well, I think the answer’s within the question there; it’s not pulling apart core business versus core purpose is the first fundamental failing.

I think there’s something really interesting around change fatigue though, and I think failure in first instance we need to have a chat about that and then we need to talk about recurring failures leading to fatigue.

So if we just go back and we say, “Source of change is something I don’t think businesses correctly identify”, they get caught in one of the three that we talked about, whether it being contextual change, strategic internal change or growth change and they don’t see the way that the three interact.

The second thing they don’t do, is they don’t look at the human element to support change and when I was talking about that I believe to my bones we’re in the resilience era, people are hiring very narrow and they’re not testing individuals’ ability to cope, yeah absolutely.

And it’s something that in a top grading sense of recruitment, people aren’t hiring wide enough and they’re not testing for these things on the way in. It is so short sighted to think that people won’t be changing.

So hiring for a competency now without testing for people’s ability to change, tweak, reskill and realign, it is a fool’s errand and we’ve seen time and time again, the inability for people to forecast long-term.

You know, it’s that Gates quote that says, “We massively overestimated the change in the next two years, massively underestimated the changes in the next ten”, and the longer it gets, the more inaccurate we get.

I think it was the mid 1980s that McKenzie and co did a forecast in cell phone adoption in the States and they predicted 9,000 cell phones in the States by the year 2000. The actual thing was 109 million. They were a long way off and those were the smartest brains at the time. So trying to predict the future and accepting things won’t change, that we’re just going to be blind sighted, it is really a fool’s errand.

So I don’t know how many organisations have successfully gone through and tested workforce resilience. I just don’t think they’ve done it.

Darren:

I’ve never heard of it. And in fact, what’s happened is that people are inclined to recruit for narrower and narrower definitions as a way of almost filling these gaps in the organisational framework.

Ashton:

Yeah.

Darren:

Now I need a digital specialist, now this is a really key area, the number of very senior marketers that have come to us in the last six months and said, “We have a mandate from the C Suite or the Board that we have to become more digital-centric, customer-centric, technology-centric.

Ashton:

Yep.

Darren:

Right? And it’s really interesting because all of those things are functional rather than strategical or purposeful.

Ashton:

Yep.

Darren:

Right?  It’s all about adding a functionality, adding digital functionality, customer functionality, or technology functionality to the offering. And I always say to them, “Look, what’s the strategy, not the execution?”

Purpose and “delivering happiness””

Ashton:

Yeah. It’s beautiful when you link people through to strategy, you know, Tony Hsieh from Zappos? So his book out at the moment, “Delivering Happiness” actually collapses a lot of those concepts so artificially saying, “Here’s our strategy, here’s our people, here’s our delivery mechanism”, he just went back to actually say, “Marketing doesn’t exist anymore.

Customer service doesn’t exist anymore. Product doesn’t exist anymore.” Every time I interact with a customer, that’s where my business lives and that’s the only place it lives and he says, “As transparency rises, the collapse between corporate strategy, customer service and marketing becomes an artificial nuance”.

Darren:

Well it’s actually aligning all of those things to the same purpose.

Ashton:

Of course it is. So the title of his book, “Delivering Happiness”, becomes the title of Zappos. That’s what the customer care charter is all about and they’re saying they’re currently doing shoes and they’re doing clothes, but it’s about delivering happiness to customers.

Darren:

Yeah, and it’s the experience that makes the customer happy because that’s the differentiator in a market where it’s often a secondary or added on feature.

Ashton:

Then you have your opportunity to make that as a core enabler of your strategy. I mean, there’s only ever two types of strategy really, there’s stroke of the pen strategies which say, “I’m going to purchase a foreign exchange hedge fund offset”, or something, you can just sign that. Just about everything else involves a human element.

Darren:

Yeah.

Ashton:

If there’s a human element, have we actually looked at diagnosing and then resourcing for that? So certainly around the diagnosis, do our people have the knowledge, the will and the skill?

As you pointed out before, those three things are actually different where people may be competent in a particular area, so they may have the knowledge but the skill and delivery around that or the will to move to the organisation’s purpose hasn’t been tested or they haven’t checked the alignment there.

Darren:

Yeah, because part of this, and a lot of the study is about organisational change so that one of the things that often is lacking in change is making sure that the people are actually understanding and see where they fit in to the ultimate structure and the delivery of purpose.

Ashton:

Yeah.

Darren:

The reason people get up in the morning and spend eight hours or nine hours or ten hours a day in a working environment isn’t the money, it is sort of why they’re there, but the reason that they do it is because they want to have a sense of purpose.

They want to feel like they contribute and belong to making a difference or making a change.

Ashton:

I run a leadership course called “Powerful Presence”, but I start that by saying, “Often leaders get something here”, and I’m pointing to my forehead, “but they miss here”, pointing to my heart.

So they can get it conceptually but they don’t get where the rubber hits the road, and certainly Daniel Pink’s work is very well known now that says, “There is actually very little correlation between financial remuneration and satisfaction. What matters is purpose, do I believe in something in where I’m going? Mastery; am I getting better and improving myself worth around that? And then autonomy, do I have a say in the direction?”

So leaders get purpose mastery and autonomy, what they don’t get is what I call change enrollment and one of our clients and friends, a guy called Michael Henderson, the Corporate Anthropologist, is actually brilliant at looking at the evolutionary cultural foundations of how organisations tribe and what’s missing around the enrollment is basically three questions and they’re so simple but they’re just stepped over.

So, do I understand the changes that are happening and how they fit? First question, so do I understand it? Second question; do I want it and am I willing to play the game? And I go back to Zappos again, at the end of their training Tony Hsieh basically says, “Now that you understand it, I’m going to give you $2000 to leave”.

So now that you get it, I’m going to give you an incentive to leave because people who leave at that point for $2000 were never born into it anyway. It’s just a beautiful thing. And then the third thing is where ownership transfers and this is the critical point of where change fails is the ownership.

Are you prepared to do what it will take?

Darren:

Yep.

Ashton:

In the absence of asking those three questions, there’s been no change enrollment and without any change enrollment, there’s just…

Darren:

So there’s that third area where fatigue has a huge role because if you’re constantly moving people and in a way, wrong footing them because you’re never properly placing them into that position where they understand and have bought into it, they’re never going to do the things that are needed to make it work.

Ashton:

Absolutely and it’s those two elements if we just double back for a second, so diagnosis basically says, “Do people have the knowledge, will and the skill?” And then, “Do I have the right resources?” So it’s a capabilities audit.

So often around, then I can get enrollment with my people, but then I need the right resourcing around it and resourcing is obviously a blend of roles, people, systems and processes which we can talk about in a minute.

But certainly around the resourcing, one of the biggest mistakes we see strategically and I think we talked about it last time is what we call cherry in a mud pie strategy.

The cherry in a mud pie strategy

Darren:

No, no?

Ashton:

Okay so cherry in a mud pie strategy is one of my favourites where a leadership team go away for a two-day offsite or sometimes it’s a week and sometimes it’s at a sort of Polynesian resort and they come back tanned and so excited.

They gather the troops there on the Monday for an all-hands meeting and they go, “Here’s our new strategy”, drumbeat, reveal, and they look out in the audience and there’s people who are already working at 120% with their arms crossed, they’re downtrodden, they’re fatigued and all they’ve heard is, “Great, more stuff to do”.

We always recommend or have a tool around this called the ‘Stop Audit’ and we almost make it as a, “Do not pass go, do not collect $200” for managers to say, before they introduce the new strategy.

They say, “We all know that everybody has been working really hard, maybe even longer than they’d like. We also understand that without introducing new capabilities or without reducing current workload, that any new strategy is going to fail.

So the first thing we’re going to do is play a game called a ‘Stop Audit’ and we’re going to review all the things we do to fill our day and we’re going to incentivise and reward you guys not with financial, but with fun experiences”, and at a team level, we go through and there’s a tool to do this called a ‘Stop Audit’.

To go through and free up capacity and resource.  We only introduce the strategy once we’ve actually confirmed the resources available for it. It’s just so refreshing and so different.

Darren:

And it is also almost human nature to continue doing the things that are not really required because you’ve always done it.

Ashton:

Absolutely.

Darren:

We had a research and analytics team in a financial services company and the team were complaining non-stop about the amount of work they had and in fact, when we did an audit, they were producing over 400 reports every month.

400 reports out into the organisation and the CMO said to me, “Well what are we going to do?” And I said, “Well this is a radical solution, but let’s not produce a report for a month and then look at how many people complained about not getting their report”.

Ashton:

Stop it!

Darren:

It was less than 10%. He actually did it, he said, “No reports. Prepare them, just don’t send them out so that if someone enquires you can send it straight away”, and it was less than 10%!

Less than 40 out of 400 reports people actually missed. Now, this is because we often make the mistake of rewarding or incentivising people to be busy. But not to focus on what the core purpose is that we’re trying to achieve.

Ashton:

Yep.

Darren:

So for the analytics and research team, insights team, they felt that producing more reports was a sign that they were important, that they were making a contribution. It was irrelevant the number of reports.

What was important was how those reports were being used to actually create the insights and the understanding to drive the business forward but no one had bothered to communicate that.

Ashton:

It’s really interesting Darren, so one of the things that we work a lot across is behavioural economics, people don’t naturally go to implication and there’s two implications there, it’s not the reports, it’s the usage of the reports that matters.

The second thing is, and your insight around 400 reports, people don’t actually calculate the hours and the cost of that. And the moment people actually calculate the hours and the cost of all the people, all the hours, all the flow-on effects, all of that, it just becomes madness.

So the little step between, “I understand what’s going on and I’m aware of the implications around that”, is a little step that changes everything. It’s probably at the heart of the Stop Audit, actually looking up and down the chain, what are the impacts and how much money would I save or how much resource would I free up? And we find that we use a term that’s called ‘Speaking to the Listening’.

‘Speaking to the Listening’

Darren:

Yes.

Ashton:

What’s the listening for things? Certainly before even putting down a new strategy, checking that we’ve done the resourcing for it and letting people know because they’re listening for a new strategy without saying, “We’re introducing this much resource”, it’s just not there.

Darren:

When they come back from their retreat in the islands and they’re all tanned, the listening in the room is probably, “Oh no, here we go again, more work to do!”

Ashton:

That’s exactly it, yeah, that’s it.

Darren:

Rather than, “What is the opportunity in this for me?”

Ashton:

Absolutely, and that basically goes back to that defensive cortisol resistant loop to the dopamine possibility something new, something different. Because change is like risk.

Risk isn’t inherently good or bad, it’s all about smart risk. Change is exactly the same. Change is not inherently good or bad, it’s all about smart change and if we can have the right thinking systems, the right support and the right models to approach it, then it should be a net benefit for everyone.

But you know, it comes back to that resilience age thing again of testing for resilience on the way through because there are some people who for whatever reason do not respond well to uncertainty. Their ability to learn, think and solve just shuts down.

The age of resilience

Darren:

There’s still roles for those people inside organisations because there are engines that need to work like clockwork to drive something forward. It’s really what we’re talking about and I guess that’s another point and I just thought of it then, the observation that often change is applied as a holistic approach across an organisation rather than strategically into the points that will make the biggest difference.

Ashton:

Yeah.

Darren:

How many times do we hear of corporate change and every single role gets spilled in the organisation and refilled to the new strategy?

Ashton:

At the same time! And that comes down to our conversation last time when we talked about what strategy is, the application of scarce resources to a particular point for maximum leverage.

Darren:

Great conversation by the way.

Ashton:

I’m enjoying this conversation too! The opportunity around resilience and as you quite rightly point out, it’s not saying that everyone in the organisation has to be resilient. What organisations don’t spot, and there’s a body of thinking around this called the ‘centre for the edge’, is that organisations have a centre of gravity, yeah?

Darren:

Yes.

Ashton:

An organisation’s centre of gravity is determined by how many people are at the edge. The thought leaders, the thinkers, the innovative people, the lean process thinkers, the design thinkers, all those people who have pulled the organisation forward.

Then you’ve got the laggards, yeah? So those people who are parodied of being the people who are stamping papers, you know in a department.

Darren:

The Finance Department and the Procurement Department.

Ashton:

Yeah, absolutely so they’re type cast negatively and we’ve seen them in movies like Officespace but there’s those people who are your laggards. The centre of gravity pulls those people in the middle and while we can recruit on a one-to-one basis for resilience and test for that, work happens in teams.

The organisation’s centre of gravity pulls will make people move

Darren:

Yes.

Ashton:

Organisations are just a group of people united by a common purpose. So unless we preserve the edge and an organisation has momentum and there is a balance or a counter-balance of more people with resilience and drive and adaptability versus the laggards, we will get stuck and we won’t move.

Now what’s interesting about that is if we go back to the 1971 Zimbardo research I think it was, which is the stand for prison experiments that it says, “While we can test and coach and learn at an individual level, people think that their nature and nurture determine their behaviour”, and it’s absolutely not the case.

Research after research, so the stand for prison experiments looked at what happens in atrocities and it is not that the people are inherently good or bad, it is the situation or context that matters.

Darren:

It’s the circumstances that they found themselves in, and how they deal with it.

Ashton:

The stand for prison experiments took a completely random sample of people and put them as inmates or guards and the negative behaviour that came out was just mind blowing!

So they actually stopped the experiment, it just got completely out of control. But what it’s proven and been replicated time and time again is that it’s the context that matters. If the context within an organisation does not have a centre of gravity that is moving, you just simply cannot effect change.

Darren:

Yep.

Ashton:

So while there are roles for specialists who are recalcitrant and resistant to change, if you can create a context where the rest of the organisation is open and moving and optimistic, they will move.

Darren:

So the overall centre of gravity has momentum towards the strategy.

Ashton:

Yeah! As a diagnosis, there’s two really interesting things happening here, that if your edge isn’t strong enough and the centre of gravity is beyond, is below 52%, then the edge will snap off!

Darren:

Okay. I’ve got an insight from this that I wouldn’t mind getting your thoughts on.

Ashton:

Yes.

Darren:

There was recently a report about boards in Australia, the way ASIC has set board governance, it is all about compliance at the expense of risk and possible growth.

Ashton:

Yes.

Darren:

Right? In that, boards spend more time on making sure that they minimise risk and maximise compliance, so in some ways, haven’t boards potentially been set up under these rules, to be part of drawing back the centre of gravity?

Ashton:

That’s such a beautiful insight Darren, and that’s exactly what’s happening. I think that certainly across western societies and cultures, lowest common denominator thinking that basically says, “Let’s find the worst person and legislate back or legislate down”, without that implication.

Remember when we talked about implication before?

Darren: 

Yeah.

Ashton:

What you just spotted there was that the implication and the cost is that innovation programs aren’t getting up and resourced. Smart risk isn’t being taken and I think there needs to be a refocusing on those things that really matter. So how can we take smart risk?

Darren:

Because here’s the other thing, the mammalian habit of the older you get, the less risk you take, the more risk adverse you become, if you populate boards with older people, then they’re going to naturally be more risk adverse and maybe that’s why profiles of boards have got such a sort of mature age as part of it.

Ashton:

Yeah. People feel they don’t know and they judge what they can’t understand. And boards are more and more likely to do that so what do they do? They seek confirming evidence of why they are where they are and I think a lot of that, Cynefin, is it?

Darren:

Cynefin, yeah?

Move from fail safe to safe fail

Ashton:

Cynefin thinking that says, “To embed innovation, we actually don’t need to say either/or, we need to say and”, so how can we carve off, instead of being fail safe and trying to shift the whole organisation at once, how can we be safe fail?

Darren:

Yeah.

Ashton:

And test.

Darren:

Test and learn at a smaller scale, manageable risk, high risk but low consequence.

Ashton:

One product, one audience, one geography, let’s play there.

Darren:

Yep.

Ashton:

But then let’s test, learn, refine, repeat. And I think one of the interesting things about test, learn, refine, repeat and where a lot of change within organisations fails is the feedback loop.

The feedback loop and “walking the floor”

Darren:

Yes.

Ashton:

You know how we talked about trigger metrics around Kodak as they just didn’t come back to it, effective feedback loops don’t just happen and certainly, it used to be the CEO in traditional factory and traditional industrial workspaces that walked the floor, you know how we talked about walk the floor?

And effective CEOs would do the walk, every morning, they’d check in, “Hey Dan, how’s it going, what’s been happening?”

Darren:

Down to the coal face.

Ashton:

Absolutely. As we’re getting linked offices, as we’re getting geographic dispersion as it’s becoming responsive email correspondence rather than intuitive insightful ethnographic, effectively a ‘walk the floor’ is an ethnographic moment, so we’re relying much more on quantitative feedback, i.e. emails coming through from managers and line leads, so we’re treating quantitative feedback as qualitative insight driven.

We actually need to be conceptually walking the floor and I guess those feedback loops are to say, “What are the real tests for success here? How are we going to manage those?”

Darren:

Well I think it’s about obtaining multiple inputs.

Ashton:

Of course it is.

Darren:

In that some ways the number of inputs have narrowed because as a way of managing complexity, people have narrowed the number of points of contact to be able to cope but in actual fact, in doing that, you’ve lost the diversity of multiple inputs, you know?

Ashton:

Yeah.

Darren:

That’s where walking the floor is so fundamental because you actually get inputs from a whole range of people.

Ashton:

Yeah.

Darren:

Different perspectives that you can then process and look for what’s the insight behind this.

Look, we’re running out of time but there is one issue Ash that I want to address and that is there are keywords around this topic like disruption, transformation, change management, I’m sure if you go onto your LinkedIn feed, there’s at least half a dozen, if not more, all talking about this.

Ashton:

Yeah.

Darren:

But aren’t we really talking about the same thing? That is, building into organisations the ability to cope with their changing circumstances and to look for the opportunities that exist within change?

Ashton:

Yeah, look, I think there is like a, just like you said, your CPI.

Darren:

Yes.

Ashton:

There’s a change index and there’s this baseline rate of change and I think there is certainly the vapour effect which basically says, “As humans, we only have very limited processing so we notice sensitivity in changes”.

So it’s only like 3-5% change, it’s the bald frog effect so we turn the air conditioning up very slowly and we don’t notice it ‘til it’s actually risen an awful way and I think the rate of change of the rate of change is being changed faster than ever before so there’s an acceleration of change that means that baseline rate has now stretched to a point where we’re noticing it and we’re really present to that.

So there is that baseline rate of change but then there’s this completely new disruption and right at the start when we looked at that Tony Scheiber concept to say that every industry in the world will be disrupted over the next ten to fifteen years, that is not an improvement on a linear or exponential scale,  if you imagine a growth curve, it’s a break.

It’s a fundamental break and Tony talks about three types of disruption from below where there was an inferior product in terms of performance and quality which has now risen, so with solar panels we’re seeing the rise of tests on Sun City. Personal computers, they used to be underperforming. From above, where there was a premium product that’s now become affordable.

Darren:

Yep.

Disruption, are we going to be it, are we going to bridge it, or are we going to avoid it?

Ashton:

Yeah so smartphones for example, the N series Nokia phones were there, they just never had mass availability and then there’s the kind of big bang disruptions that were better and cheaper from day one.

For example, the old directory books and the Tom Toms when faced with Google Maps that was free and better, were just completely out of business.

So the Step Change approach around disruption is basically, “You need to get better with dealing with change, full stop.” And that’s the type of conversation that we’ve had and probably listening to a TrinityP3 podcast is the best thing you can do, but then disruption’s coming and you’ve got three choices.

So as you look at the rise of fundamental technology changes, the artificial intelligence that says, half the white collar jobs over the next ten to fifteen years will potentially be redundant so change is coming at a point of disruption and it will disrupt, so change, change, change, change, break, disrupt.

Darren:

Yep.

Ashton:

Are you going to be the disruption? Are you going to be that disruption in your category, and therefore is that your purpose and strategically, can you pull that off?

Are you going to bridge the disruption, so how do I transition my core business model across that disruption and bridge it? And I need to put in place the thinking around that.

Or do I avoid it?  Do I move now to say, “I will not actually be able to be that disruption or avoid it” or bridge it so I need to avoid it?

Darren:

I need to avoid it completely.

Ashton:

So for example, moleskin, potentially not credentialed to move into electronic processing, notetaking and those things so they actually moved to an uber premium model of embossed uber luxury so I just avoid it. I say, “I cannot deal within that place”.

Darren:

I’ll give up mass to move to a higher margin but re-positioned in the marketplace.

Ashton:

Yeah, so I think if we need to wind up, that’s probably the question, are we going to be it, are we going to bridge it, or are we going to avoid it?

But the clock’s ticking for us and business owners out there, so that’s probably a great place to leave it.

Darren:

Fantastic, thank you very much Ashton Bishop, CEO of Step Change and as always, it’s been a real pleasure, thank you.

Ashton:

Thank you Darren.

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About Darren Woolley

Darren is considered a thought leader on all aspects of marketing management. A Problem Solver, Negotiator, Founder & Global CEO of TrinityP3 - Marketing Management Consultants, founding member of the Marketing FIRST Forum and Author. He is also a Past-Chair of the Australian Marketing Institute, Ex-Medical Scientist and Ex-Creative Director. And in his spare time he sleeps. Darren's Bio Here Email: darren@trinityp3.com

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