Organisational Change Management Volume 1

Common Management Errors

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(not necessarily in order of importance and with some suggestions for remedial strategies)

"...Generally social and behavioural causes frustrate change initiatives rather than technical problems"Too much focus on the tip of the iceberg, on the measurable and observable, on the before and after, and not on the complex process of changing..."

Patrick Dawson, 2005

Accepted Change Mantra Under Threat
With most change projects failing, some recent research is challenging some of the accepted mantras of change management. For example, c
oncepts based on detachment from the past, stages and phases are being challenged as most people need to remember the past, build on it, learn from it, etc, not neglect or forget it.

"...staged theories have a certain seductive appeal - they bring a sense of conceptual order to a complex process and offer the emotional promised land of 'recovery' and 'closure'. However they are incapable of capturing the complexity, diversity and idiosynatic quality of the grieving experience. Staged models do not address the multiplicity of physical, psychological, social and spiritual needs experienced by the bereaved, their families and intimate networks..."

Downe-Wamboldt & Tamlyn as quoted by Ivana Crestani, 2016

The letting go of the past ignores the reality that staff are experiencing the  past, present and future, now. This "letting go" approach creates resistance.

The need "to let go of the past" and "move on" has been the basis for concepts like the
i) grief cycle (Kubler-Ross, 1969) with it stages, ie shock, denial, anger, bargaining, depression, acceptance & integration (see elsewhere for more detail) is being challenged. We need to build and reflect, ie learn from the past, not neglect or ignore it.
ii) managing transitions (William Bridges, 1991), ie moving zones from "ending via neutral to beginning" (
see elsewhere for more detail)
iii) SCARF (David Rock, 2008), ie status, certainty, autonomy, relatedness & fairness; it focuses on threats and rewards
NB the way people view change can depend on their attitude to change, ie is it an opportunity to look forward to or more a threat that needs to be carefully managed or is it inevitable?
- pushing the concept of "get on the bus/train, or get off" encourages group think rather than diversity, differing opinions, etc
- too often we focus on performance when it should be capability
- too often we focus on challenges, issues, etc rather than building on past successes, things we do well, etc
- are change models are too simplistic or too generalised given the complexity and situational elements of change (see more detail on the section covering 70+ change frameworks)
- most frameworks tend to be top-down, rational, linear and assume a single event, yet most organisations experience continuous multiple and frequent change
- the approach is too problem centric, ie a problem to fix rather than people/emotional/behavioural focused
- dominant focus on negative emotions like fear, anxiety, anger, sadness, resistance, etc that are considered to be dysfunctional; with limited research on positive emotions like hope, excitement, happiness, confidence, etc). Emotions are viewed more as a source of resistance than support.

5 levels of emotions (developed by Ashkansy and quoted by Ivana Crestani, 2016), ie
i) within person (emotional reactions, behaviours, etc)
ii) between persons (individual differences, emotional intelligence, etc)
iii) interpersonal (emotional labour, interpersonal relationships, etc)
iv) groups and teams (emotional contagion, leadership, group behaviour, etc)
v) organisation-wide (emotional culture & climate, leadership & organisation performance, etc)

"...employees experience a range of emotions in response to change; some feel calm, some feel excitement, while others feel anxious...... emotions become less intense over time, and a change from anticipatory emotions of hope and fear in the pre-merger stage, to realise emotions of happiness and sorrow post merger..."
Dasborough as quoted by Ivana Crestani, 2016

People are experiencing more change, eg from 2012 to 2015 both the pace and impact of change has increased by 71% and 65% respectively (Ivana Crestani, 2016). Thus people are experiencing constant and multiple changes and need to be aware of the emotions that people are experiencing as they are in
- several stages of change at once
- accumulating emotional experiences during changes
- past emotional experiences will impact on subsequent change experiences
- how do emotions unfold as change unfold?

Different levels in the organisation have different experiences with change, eg

- senior levels (change is intentional, a conscious decision, designed to solve problems and provide new opportunities like promotional opportunities), ie
"...leaders don't see changes occurring simultaneously across the organisation because of a narrow focus and organisational silos..."
Ivana Crestani, 2016

- lower levels (change is imposed, it is out of one's control, it creates problems and disrupts routines)
"...employees experienced multiple changes simultaneously, but their ability to process these changes has an upper limit..."
Ivana Crestani, 2016

NB Change is about people and feelings.  Change and emotions are inseparable.

Engaging employees emotionally
This involves
- communicate continuity or connection via the past.  This will enhance the sense of belonging, provides meaning to what does not change, gives a sense of control and enhances confidence
- supportive leadership that ensures staff have the capability to perform, capacity to change, enabling employees to change helpfully and with resilience, and using respectful language
"...these participative approaches can contribute to creating a community spirit which is an important role for communications and organisational change to engender commitment, trust in the organisation, its identity and its leaders, and readiness to change..."
Elving as quoted by
Ivana Crestani, 2016

More research is required around the emotional experience of change around the following elements
- emotional intelligence (recognising and managing our own and others' emotions)
- emotional contagion (negative and positive emotions spreading like viruses)
- emotional labour (displaying required emotions at work, eg putting on a brave face)
- emotional culture (what emotions are expressed, suppressed and valued, eg culture of fear or trust)

Concept of continuing bond
This challenges a staged approach to grief.
Decades of research suggests that people retain their bonds with departed love ones and this can be a positive experience; this applies at the individual and collective levels. Staff have families, friends (at work and outside), etc with whom they will discuss change and talk about the past in a healthy positive way to help build the future. Linked with this is the notion that all emotions are healthy whether positive, negative or mixed. Negative emotions are not necessarily destructive or dysfunctional; they can help give constructive meaning to the change process. The best way to deal with negative emotions, like anger, is to acknowledge the emotions behind these issues rather than suppressing emotions. Also this means taking staff seriously and moving away from focusing on discrete emotions to understanding the emotional experience.

The most common management errors are classified under 19 main headings

i) Thinking that Your Organisation and its Products/Services are "Bullet-proof"

ii) Unable to Handle the Unexpected/Uncertain/Highly Improbable/Unforeseen Consequences, ie chaos is part of life

iii) Not Understanding Organisational Culture (including behaviour of complex systems)

iv) Not Understanding Situational and Contextual Settings

v) Structural Inertia and Related Organisational Matters

vi) Lack of "Buy-in"/Ownership of the Change Agenda by Staff (especially the informal leaders)

vii) Not Understanding the Need for a Holistic and Multi-disciplinary Approach (including the Integration and Impact of Psychology and Neuroscience)

viii) Not Understanding the Importance of Timing

ix) Not Understanding the Balance between Intuitive and Analytical Approaches

x) Focusing More on Symptoms than Causes

xi) Measurement Perceptions

xii) Not Understanding the Importance of Stories

xiii) Not Reading Social Signals (body language) Correctly

xiv) Lack of

xv) Inappropriate Treatment of Change

xvi) Poor Negotiating Skills

xvii) Some Myths

xviii) Too Much Reliance on Technology

xix) Emotion, not knowledge, is the catalyst for change

1. Thinking that Your Organisation and Products/Services are " Bullet Proof"

Need to understand the elements of capitalism. Capitalism is based on enterprises, market competition and uncertainty. It is inherently volatile with cycles of booms and busts; it is not about equilibrium. As Joseph Schumpeter stated

"... economic progress, in capitalistic society, means turmoil...... the capitalist process progressively raises the standard of life of the masses. It does so through a sequence of vicissitudes...... capitalism not only never is, but never can be, stationary..."

as quoted by Alex J Pollock, 2010

Capitalism is not about creating stability. It is about intrinsically uncertain, as we do not know what the future holds; we don't know the possibilities of future outcomes. Capitalism involves competition as a discovery process and market economies thrive on an on-going supply of unreasonable optimism. It has been estimated that there will be a crisis every 10 years. The booms and busts reflect the fundamental uncertainty and the limitations of human minds in dealing with it. Despite the ups and downs, the American standard of living has risen sevenfold during the 20th century.

"... the recurring financial cycle......around a rising trend of greater and greater overall economic well-being, the bubbles and crises notwithstanding. This can only happen when capitalism releases the energy of enterprise with its unreasonable optimism, entrepreneurialship, the creation of new knowledge, and investment in experiments, many of which will fail..."

Alex J Pollock, 2010


"...companies aren't change proof, and no company will last business lasts for ever..."

Richard Branson, 2008

For example, the music industry is always changing. By 2008 the CD as a retail item was heading into the history books. It peaked in 1999 when the worldwide market for consumer spending on music was $US 17 b per year. By 2005 the figure had dropped to around $US 10 b, with digital downloading on the rise. By 2012, the revenues are projected to be around $US 9 b and will be dominated by revenues derived from downloading music via the Internet. When Virgin Records started in the 1960s it funded

"...recording sessions, manufactured the product, distributed to the shops and then marketed the band and the music......gave loans and advances for touring, for making promotional videos, for equipment, for props and lighting.......advised and looked after the careers of musicians and handled the accounts and sales. Did all this work make us future-proof" Of course not. The value of these services has disappeared, thanks mainly to digital technology, the Internet and the arrival of YouTube and social networking..."

Richard Branson, 2008

Furthermore, there is no need for the expensive recording studios as top-quality albums can be recorded on a decent laptop and distributed via the Internet. Thus the cost of manufacturing and distributing is minimal. The business model has changed from selling LPs and CDs in large numbers, ie economies of scale, to recover the manufacturing, printing, shipping and retail costs plus royalties. The new model is based on digital "cost-free" via the Internet where the economies of scale are not important. Promotion can now be done via social networking on MySpace, Facebook, etc.

In 2007, an English band released their album "In Rainbows" as a pay-what-you-like digital download. Many experienced operators in the music industry thought that they were mad. It was successful with

"...40 percent of fans paid an average of 3 UK pounds each for the album, making the band nearly 1.5 million UK pounds......they had licensed the music and it went on sale as a CD too..."

Richard Branson, 2008

2. Unable to Handle the Unexpected/Uncertain/Highly Improbable/ Unforeseen Consequences, (includes Choas, Complexity, Cynefin Framework, etc)


"...human nature hasn't changed a bit. What has changed is the environment we live in..."

Seth Godin, 2007

Human beings are creatures of habit and prefer to stay in their zones of comfort. As a result, we are not good at handling the unexpected and uncertainties that lie outside our 'tunnel of possibilities. Usually the unexpected and unknown events are rare, have an extremely high impact and are low in predictability; although they appear retrospectively predictable. We need to adjust to handle them. Usually the problem lies not in the nature of the events but in the way we perceive them.

" matter how much research and planning you do, you will never perfectly predict how the market......will unfold..."

Jayne Herdlicks as quoted by Joanna Gray, 2015/2016


" must never forget that every change ushers in unforeseen consequences. This applies as much to welcome changes as unwelcome ones......obviously, you cannot plan for the unexpected. All you can really do is never let your guard down..."

Richard Branson, 2008

Linked with a preference to stay in your zone of comfort is a fixed mindset (Catherine Fox, 2009). A fixed mindset is a simple framework for gaining self-esteem and judging others. It encourages stereotyping by using preliminary information to decide on a fixed view. Fortunately, our brain continues to change throughout our lives. This gives us a chance to update information for better decision-making. We need to encourage a culture where we learn from our mistakes. Furthermore, when we are willing to learn, we are more receptive to feedback or criticism. Thus success depends upon effort, persistence and being prepared to move out of your comfort zone rather than being complacent about innate talent.

In spite of our exponentially increasing knowledge base, the future is becoming less predictable. Associated with this is a lack of understanding of randomness, particularly large deviations, and a preference for anecdotal over empirical evidence. In practice, randomness is fundamentally incomplete information. A truly random system has unpredictable properties while a chaotic system has entirely predictable properties.

There are 2 types of randomness, ie

i) generally if your sample is large enough, no single instance will significantly change the aggregate or the average, ie

"...endure the tyranny of the collective, the routine, the obvious, and the predicted..."

Nassim Taleb, 2007

ii) inequalities, such as one single observation can have a disproportionate impact on the average or the total, ie

"...that tyranny of the singular, the accidental, the unseen, and the unpredicted..."

Nassim Taleb, 2007

(NB Strategies to handle randomness as expressed by volatility, risk, uncertainty, etc include spreading your exposure to reduce vulnerability to, and/or reliance on, one or few activities, and encouraging diversity in thinking and experience.) Assign a price to risk; risk is related to uncertainty and/or volatility. The more risky the activity, the greater the expected rate of return, ie risk premium. Link risk and return via cost benefit analysis of risk premiums.

Sometimes changes in technology have unexpected impacts. For example, Viagra was initially tested as a hypertension drug. To have an appreciation of the impact of unexpected events, we need to understand the political, sociological, demographic, etc fads and trends.

"...Owing to the growth of scientific knowledge, we overestimate our ability to understand the subtle changes that constitute the world, and what weight needs to be imparted to reach such change..."

Nassim Taleb, 2007

Remember: people do not act in rational ways. Thus to predict behaviours and reactions is not easy.

i) people choosing not to save for old age by spending their superannuation quickly after retirement

ii) exposing themselves to addictive substances, ie get short-term "kick" but long-term problem, eg smoking cigarettes (additive nicotine and other health issues like cancer, heart, diabetes, etc)

iii) people sunbaking to become tanned in the short term but exposing themselves to risk of skin cancer in the long term

Risk homeostasis (under certain circumstances, changes that appear to make a system for an organisation safer in fact do not). The rationale for this is that we have a fundamental tendency to compensate for low risk in one area by taking greater risk in another. For example, the introduction of childproof lids on medicine bottles led to a substantial increase in fatal child poisoning. The reason for this was that adults became less careful in keeping medicine bottles out of the reach of children. But it can work in an opposite direction. In the late 1960s, Sweden changed from driving on the left-hand side of the road to driving on the right. This was expected to increase the accident rate. In fact, initially road fatalities dropped by 17 percent because people drove more carefully to compensate for their unfamiliarity with the new traffic patterns

Unexpected events that have negative impacts happen more quickly than those that have positive impacts. Furthermore, the unexpected events provide an exploitative opportunity for entrepreneurs.

(As an aside, research has shown that venture capitalists, and not the entrepreneurs, make all the money!!!!!!)

As there are many subtleties, including chance, there is an asymmetry between using the past to determine the future. Owing to this introspective defect, we incorrectly think of tomorrow as a projection of another yesterday. Furthermore, a small input in a complex system can lead to large non-random consequences, depending upon the initial conditions, etc

Control of our fate

Despite our belief that we can control our own fate (Cassius's idea), our supply of data/information and the use of computer modelling, etc, we are not very good at making accurate predictions. For example

- meteorologists have a bad reputation for the accuracy of their predictions of what future weather will be like

- the terrorist attacks (9/11) were not predicted with any degree of accuracy.

- the attack on Pearl Harbor in the 1940s was not predicted with any degree of accuracy

- the global financial crisis (starting in 2007) was not predicted with any degree of accuracy

- just prior to the presidential election in 2000, computer modelling predicted that Al Gore would win by a landslide; but George W Bush won

- the presidential election (2012) between Barak Obama and Mitt Romney was predicted to very close but Obama won very convincingly

- starting in 1960s, most experts did not predict developments or misread events involving

i) Deng Xiaoping (purged in 1966 during the Cultural Revolution and re-instated in 1973 to lead the re-emergence of China)

ii) Ayatollah Khomeini (living in exile in Iraq/France before leading the Islamic revolution in Iran)

iii) Margaret Thatcher (a junior education minister & later the first female PM of UK)

iv) Karol Jozef Wojtyla (Archbishop of Cracow (Poland) during Russian domination & later becomes the first non-Italian Pope (John Paul II) since Adrian VI (1522))

- research by Philip Tetlock found that despite

"...political scientists claiming that a political outcome has absolutely no chance of occurring, it nevertheless happens around 15% of the time..."

Nate Silver, 2012

- attempts to predict earthquakes by using highly sophisticated, mathematical and data-driven techniques have proved inadequate, eg the Fukushima nuclear reactor was designed to handle a magnitude 8.6 earthquake based on seismologists' best predictions, ie anything larger than 8.6 was supposedly impossible. In March 2011, Japan was hit by an earthquake of magnitude 9.1. Furthermore, the building of sea walls to prevent damage to coastal villages from tsunamis caused by earthquakes made the situation worse, ie the water flowed over the top of the walls and the walls prevented the water flowing back to the sea. The walls were built on historical evidence of the past tsunamis. The one in 2011 was considerable worst than previously recorded.

organisational development change management

(source: Henry Tricks, 2013)

The watch industry is a good example of unpredictability, ie who would have believed that
- men would ditch the pocket watch for the more feminine "wristlet" version
- in the 1970s, Swiss watch industry was decimated by the quartz time piece made famous by Japan's Seiko. This less expensive and more accurate watch marked the end of the traditional industry with mechanical cogs-and-spring movement, ie it is estimated that 3/4 Swiss watchmaking workforce and their machinery disappeared. There was no certainty that the mechanical watch was going to survive. The Swiss watch industry recovery was based on the watch becoming a desirable luxury item like the Omega Speedmaster watch that went to the moon and is still a huge success in 2016.  Nicolas Hayek Snr was the man responsible for introducing a face-saving Swatch and consolidating the Swiss industry
- smart or connected watch, ie in addition to telling the time, being a luxury item, etc the watch had become a mini computer (Bani McSpedden, 2016)

Another example of poor predicting is Chinese steel production. Two of the world's largest miners, eg BHP Billiton and Rio Tinto, with the help of consulting group Kinsley in 2007 predicted that China's annual steel production would reach 1 b. tonnes between 2025 and 2030. This prediction was 60% higher than China's production in 2010. It was used by private organisations and governments like the Asian Century White Paper (2012), Australian Treasury, Reserve Bank of Australia, etc, in their planning for the outlook of federal budgets and for thinking on monetary policy, ie encouraged expenditure, like infrastructure, and tax breaks that were unsustainable. This prediction resulted in unrealistic expectations. Recent events have seen a weak steel demand in China, eg peaked at 823 m. tonnes in 2014 and expected to fall by 15% in 2015, and the price of iron ore hovering around a decade low of US $53 per tonne. It is now thought that the figure overstated annual demand by 350 m. tonnes for 2030!!!!! This is a classic case of expecting what has happened in the past to be repeated in the future, ie

" a country raced to build enough apartments, railways, airports, cars and household appliances for the more than 450 m. people who flocked from villages to the cities, steel production soared. It went from an average annual growth of 7% during the 1980s to 10% during the 1990s and close to 20% in 2000s. At the start of the past decade, China made up 15% of the global steel production, now it accounts for around half..."

Angus Grigg et al, 2015

Chinese growth has stalled especially with the weak property market where construction accounted for most of its steel production.

After being exposed to predictions, people can change their behaviour as a result of the prediction and this can impact on the accuracy of the prediction, ie becomes a self-fulfilling prophecy

Key to good decision-making is prioritising

Accurate predictions very difficult, eg

Weather forecasting

- it is a dynamic system - everything affects everything else & systems are in perpetual motion

- uncertain initial conditions

- poor data

(NB Do not mistake statistical correlation with causation, eg positive correlation between electricity poles & heart disease)

Change is like weather & economic forecasting, ie very hard to make accurate predictions, ie

"...there are too many factors to lay down fixed rules..."

David Hains

"...the amount of knowledge in the world is increasing, the gap between what we know and what we think we know may be widening..."

Nate Silver, 2012

Over a 15 year period (starting in the 1980s) it was found that expert opinions, regardless of the field of expertise, were not much better than random chance in the accuracy of their predictions, from work by Philip Tetlock as quoted by Nate Silver (2012),

Our reliance on computer modelling has demonstrated the fragility of the conclusions which stem from initial choices of assumptions, variables, etc. Models are only as good as the assumptions that went into them, ie if the assumptions are wrong, so are the predictions. Situations can change that make assumptions no longer applicable. No model is perfect, ie

i) economists forecasting recessions - in the 1990s, of the 60 recessions around the world, only 2 had been predicted 12 months in advance

ii) If the US Federal Reserve's forecasts had been realised over the last 4 years, then by 2014 the US economy should have been $US 1 t. larger

iii) most projects take longer to complete than planned and are over-budget

Our reliance on computer modelling has demonstrated the fragility of the conclusions which stem from initial choices of assumptions, variables, etc. Models are only as good as the assumptions that went into them, ie if the assumptions are wrong, so are the predictions. Situations can change that make assumptions no longer applicable. No model is perfect, ie

"...models that work today can break tomorrow, with no warning and no explanation..."

James Weatherall, 2013

Need to distinguish between risk and uncertainty. Risk is a "known unknown" while uncertainty is an "unknown unknown". This concept refers to

- "known known" refers to when a question has an exact answer

- "known unknown" refers to a question with an imprecise answer

- "unknown unknown" refers to when we don't know what question to ask, ie it is not being considered; it can not be imagined; it is as though it does not exist

As binary categories of either "predictable" or "unpredictable" are very rare, we need to handle uncertainty by using probability, ie based on past experience, there is a certain probability of the event happening again

We need to be careful not to mistake "unfamiliar" for the "improbable" or "unlikely" or "unimaginable", eg

- Pearl Harbour attack by Japan in WW2

- Cuban missile crisis

- 9/11 terrorist attack on World Trade Centre

Some financial "unknown unknowns" examples and their impacts

- Switzerland (January 2015) - Swiss National Bank abandons its 3-year currency cap of 1.20 franc to the euro, sending the currency skyrocketing by more than 30% against the euro in minutes
- Russia (December 2014) - Russian Central Bank increases interest rates from 10.5 to 17 percent (the largest one-day increase since 1998 Russian financial crisis). It was designed to store up the collapsing Russian ruble and stave off skyrocketing inflation, but instead triggered further panic in the Russian markets and the ruble plummeted, hitting a low of 80 against the US dollar
- USA (1994) - US Federal Reserve increased interest rates by 200 basic points in a series of unexpected decisions over a two-month period. This impacted bond portfolios and hedge funds; banks plunged into the red
- Britain (1992) - when George Soros placing a US $ 10 b. speculative bet against the UK pound, the Bank of England countered by hiking interest rates by nearly 5 percentage points to 15%; it failed. Sterling was pulled out of the European monetary system and the pound collapsed. Soros's profit was estimated to be over £1 b.; UK Treasury lost £3.4 b.
- Australia (1973) - Australian import tariffs were cut by 25% by the new Labour government led by Gough Whitlam, resulting in hundreds of Australian factories shutting down, manufacturing output plunged by 10% in the year, and over the next 5 years, almost 200,000 manufacturing jobs were lost
  - USA (1971) - US President Richard Nixon uncoupled the US dollar from the gold price; this ended the Bretton Woods system of fixed exchange rates established at the end of World War II. Other currencies were no longer able to peg to the gold standard, giving rise to the notion of globally floating exchange rates for major currencies.

Another example of unexpected events impacting one business is James Packer's casino business. In January 2015, the unexpected change in President & government in Sri Lanka crushed Packer's proposed hotel and casino in the capital, Colombo, as Packer was seen as too close to the previous regime. Then the unexpected Queensland election result in early 2015, resulting in a change in government has delayed the tender for the new casino and entertainment complex in Brisbane. Followed by delays in building Crown Sydney - a $2 b. hotel and casino plan for Barangaroo waterfront development area. None of these events were easily foreseeable!!!!

This is called "mind-blindness" when we believe that we can control our own fate, ie we can control nature (not live in harmony with it)

Chaos Theory

It is about the tipping point at the edge. It assumes that the system is

- dynamic (the system's behaviour at one point in time influences its future behaviour, ie everything affects everything else & systems are in perpetual motion)

- nonlinear (follows an exponential rather than additive relationship)

- Some major event can be the accumulation of many small, inter-connected events, ie a chain reaction

- there is inevitable divergence of all but identical initial states as they evolve over time, but small differences in initial conditions can produce very great ones in the final phenomena. Eg from his computer model, Edward Lorenz by rounding 6 digits (0.452386) to 3 (0.452) produced greatly different weather results

Complexity theory

Complexity theory is a way of making sense of advanced technologies, globalisation, intricate markets, cultural change, etc

Organisations have gone from complicated to complex

There is duality, ie fight and oscillation between order & disorder (chaos) that can result in events seeming both very predictable & very unpredictable at the same time

There are many diverse, interdependent parts interacting and they are in constant flux so that the final outcome is unknown, ie very simple things can behave in strange & mysterious ways when they interact with one another

The same starting conditions may yield different results

Seemingly simple actions may produce unexpected and/or unintended consequences, ie long periods of apparent stasis marked by sudden change that are very hard to predict

Rare events are becoming more significant than average ones

This concept applies to a system which has the following characteristics

"... - a lot of interacting elements - the interactions are nonlinear, and minor changes can produce disproportionately major consequences

- the system is dynamic, the whole is greater than the sum of its parts, and solutions cannot be imposed; rather, they arise from the circumstances. This is frequently referred to as emergence

- the system has a history, and the past is integrated with the present; the elements evolve with one another and with the environment; and evolution is irreversible

- a complex system may, in retrospect, appear to be ordered and predictable; hindsight does not lead to foresight because the external conditions and systems constantly change

- unlike in ordered systems (where the system constrains the agents), or chaotic systems (where there are no constraints), in a complex system the agents and the system constrain one another, especially time. This means that we cannot forecast or predict what will happen......More recently, some thinkers and practitioners have started to argue that human complex systems are very different to those in nature and cannot be modeled in the same way because of human unpredictability and intellect. Consider the following ways in which humans are distinct from other animals:

- they have multiple identities and can fluidly switch between them without conscious thought. (For example, a person can be a respected member of the community as well as a terrorist)

- they can, in certain circumstances purposefully change the systems in which they operate to equilibrium states (think of the six Sigma project) in order to create predictable outcomes..."

David T Snowden et al, 2007

. Need to be careful of assuming that

- statistical correlation means causation

- misleading noise, ie random patterns that can be mistaken for signals, iedata & modeling can hide the true signal/phenomena/trend, etc. For example, the complexity (including variability, risk, uncertainty, etc) of economic data has created much noise through daily, cyclic, seasonal fluctuations, etc that can hide the trends &/or generate conflicting meanings

- usually all the signals are present but we cannot read them correctly. The problem is not a lack of information but a failure of accurate prediction

- importance of luck

Some Impacts of Chaos & Complexity

. Use simplification, generalisation &/or approximations to understand complex events, eg making assumptions about key factors, rounding off figures, etc. This can be very misleading. This makes accurate predictions, about weather, economic/business cycles, recessions, political outcomes, etc very difficult to achieve, eg

- weather forecasting

i) It is a dynamic system ie everything affects everything else & systems are in perpetual motion

ii) Uncertain initial conditions

iii) Poor data

- economic forecasting

i) Hard to determine cause & effect from economic statistics alone

ii) Economy is not static, so some past explanations may not hold for future situations

iii) Impact of political decisions

iv) Lack of accurate data despite the huge amounts produced, eg the US Govt produces around 45,000 economic indicators annually plus private providers are supplying 4+ million.

. On the other hand, simplification, etc is powerful if it gives better initial understanding of the situation. Then we need to explore the impact of changing the assumptions (especially if they fail) used in the simplification.

. Change is like weather & economic forecasting, ie very hard to make accurate prediction, ie

"...there are too many factors to lay down fixed rules..."

David Hains as quoted by Andrew Cornell, 2009a

Cynefin framework (see earlier section "peak-performance etc organisation" for more details)

Cynefin framework is based on complexity theory and aims to help understand the more unpredictable and complex world. It revolves around 5 contexts:

i) simple context (known knowns) is characterized by obvious, stable and cause-and-effect relationships; the right answer is self-evident. This context requires assessment of the facts or situation, followed by categorising and responding to it

ii) complicated context (known unknowns) contains many right answers. Even though there is a clear relationship between cause and effect, it is not obvious. This situation requires sensing (the facts), analysing and responding

iii) complex context (unknown unknowns) involves the right answers not being obvious; disctinctive patterns emerge that require experimentation; most businesses operating in this context need to probe first, then sense, and then respond

iv) chaotic context, by its name, implies infers that searching for the right answer is pointless; relationships between cause and effect are impossible to determine as they are shifting constantly and no manageable pattern exists, as the 9/11 events illustrate. This situation requires initial action to restore order, sense where stability is present, and then consideration of where to transform the situation from chaos to complexity

v) disorder context applies when it is unclear which of the other 4 contexts is predominant. There are multiple perspectives jostling for dominance; factional leaders are in dispute; discord reigns. This requires breaking the situation into its constituent parts and assigning each to one of the other 4 contexts; then decisions can allow an intervention in contextually appropriate ways

Five main reasons we fail to anticipate events

According to Nassim Taleb (2007), there are 5 main reasons (errors of confirmation, narrative fallacy, human nature, distortion of solid or silent evidence and tunnel vision) we fail to see unexpected events:

i) errors of confirmation or problems of conductive knowledge or learning backward - we focus on experience and preselected observations, and then generalize from them to the unseen; we tend to look at what confirms that knowledge. This is knowledge gained from observation. We hope we can know the future with some certainity, given our understanding of the past. Yet what we learn from the past can turn out to be irrelevant or false for the future, so we need to be careful of our habits and conventional wisdom. Our tendency to generalize can lead to dangerous stereotyping and discrimination.

"...making a naive observation of the past as something definitive or representative of the future is the one and only cause of our inability to understand..." the future

Nassim Taleb, 2007

"...we are all motivated to maintain a sense of psychological safety by nurturing a positive self-image, by looking at the world as a knowledgeable and predictable place, and by avoiding risk. This can lead to an overestimation of the self and a habit of attending only to information that bolsters our existing beliefs..."

Boris Groysberg et al, 2010

Remember the statement of Captain Smith of the Titanic about his exemplary safety record before the fateful journey!!!!!!

This is linked with domain specificity and naive empiricism

- domain specificity - means that we react to a piece of information based on the framework that surrounds it and its social-emotional situation, rather than logical merit

- naive empiricism - we have a natural tendency to look for instances to confirm our perceptions, ie

"...take the past instances that corroborate your theories and treat them as is misleading to build a general rule from observed facts......sometimes a lot of data can be meaningless; and at other times one single piece of information can be very meaningful......once your mind is inhabited with a certain view of the world, you will tend to only consider instances proving you to be right. Paradoxically, the more information you have, the more justified you will feel in your views..."

Nassim Taleb, 2007

This asymmetry of knowledge is important as it provides insight into the unpredictability of the world, ie all pieces of information are not of equal importance.

ii) narrative fallacy - we believe that stories will display distinct patterns; we fool ourselves with stories and anecdotes. It is

"...our predilection for complex stories over raw truths. It severely distorts our mental representation on the world; it is particularly acute when it comes to a rare event......addresses our limited ability to look at sequences of facts without weaving an explanation into them, or, equivalently, forcing a logical link, an arrow of relationship, upon them"They make them all the more easily remembered; they help them make more sense. Where this propensity can go wrong is when it increases our impression of understanding..."

Nassim Taleb, 2007


"...the more random information is, the greater the dimensionality, and thus the more difficult to summarize. The more you summarize, the more order you put in, the less randomness. Hence the same conditions that make us simplify pushes us to think that the world is less random than it actually is..." and the less you are able topredict the future and handle unexpected events

Nassim Taleb, 2007

Remember: facts do not change but people's perceptions and/or interpretation of the facts do, ie perception distortion. Furthermore, we are better at explaining than understanding.

iii) human nature (we are programmed to handle the expected rather than the unexpected; how our emotions get in the way of a reference)

We have a tendency to reduce information into categories and store it in our brains, rather than looking outside our information set, judgments and explanations. This is partly explained biologically, as it is expensive (energy wise) to put information into our brain, costly to store it and costly to manipulate and retrieve it. Furthermore, parts of the brain are important in distinguishing instantaneous, emotional reactions (limbic) from thinking responses (cortical).

Also, fragrances, like scent, go straight to the limbic system and have an immediate effect on mood. It is like music & taste, ie it reminds us of something, somewhere, etc and make sure feel better or worse

Our working memory has limited holding capacity, eg we have difficulty remembering telephone numbers that exceed seven digits. Thus compression and patternising of information, ie dimension reduction, is vital to the performance of conscious work. We selectively remember facts about the past that suit our point of view and conveniently forget other facts that challenge our views.

Both causality and narrativity are symptoms of the dimension reduction.

- causality suggests a chronological dimension that leads to the perception of the flow of time in a single direction. Our emotional makeup is designed for linear causality. With relationships between variables are clear, crisp and constant; yet the world is not - it is more non-linear, asymmetrical in its relationships and consequences. Furthermore, the appearance of busyness reinforces the perception of causality - the link between results and one's role in them.

- narrativity allows us to see past events in a more predictable, more expected and less random way.

Thus memory is dynamic and not fixed, static or constant. This allows for perception and retrospective distortions, ie

"...memory is more of a self-serving dynamic revision machine: you remember the last time you remembered the event and, without realizing it, change the story at every subsequent remembrance. So we pull memories along causative lines, revising them involuntarily and unconsciously......a memory corresponds to the strengthening of connections from an increase of brain activity in a given sector of the brain - the more active, the stronger than memory......because your memory is limited and filtered, you will be inclined to remember those data that subsequently match the facts..."

Nassim Taleb, 2007

Our happiness depends more on the number of instances of positive feelings rather than their intensity. This is called the positive effect. For example, in businesses the accounting period is too short to reveal whether or not performance is good or otherwise; yet management is judged on the short-term indicators.

"...But we do not live in an environment where results are delivered in a steady manner..."

Nassim Taleb, 2007


"...humans will believe anything you say provided you do not exhibit the smallest shadow of diffidence......they can detect the smallest crack in your confidence..."

Nassim Taleb, 2007

iv) distortion of solid or silent evidence (we see what we want to see, ie these mis-perceptions become our reality, eg how we are selective in our understanding of history)

"...silent evidence is what events use to conceal their own randomness..."

Nassim Taleb, 2007

A subset of distortions is bias, ie

"...the difference between what you see and what is there..."

Nassim Taleb, 2007

We like to categorize things but don't consider the fuzziness of the boundaries between categories, ie

"...categorizing always produces reductions in true complexity......any reduction of the world around us can have explosive consequences since it rules out some sources of uncertainty......underestimate the impact of the highly improbable..."

Nassim Taleb, 2007

Fuzziness is the very essence of uncertainty.

Thus we assume that the world we live in is more understandable, more explicable, less irregular and more predictable than it actually is. In fact,

"...we are just a great machine for looking backward......humans are great at self delusion..."

Nassim Taleb, 2007

Yet history runs forwards, not backwards!!!

Silent evidence can cause a distortion at both ends of the spectrum, ie an overestimation or an underestimation.

Lucid fallacy refers to the elements of uncertainty that we face in real life that have little connection to the ones we encounter in the classroom. Computable risks calculated in the classroom are largely absent from real-life.

v) tunnel vision (we focus on a narrow range of well-defined sources of uncertainty; the difference between what people actually know and how much they think they know; the neglect of outside/external sources of uncertainty)

"...we are too narrow minded a species to consider the possibility of events straying from our mental projections"on matters internal to the project to take into account external uncertainties, the unknown unknown..."

Nassim Taleb, 2007

Many important breakthroughs, such as computers, Internet, laser were unplanned, unpredicted and initially not appreciated. Despite our improved ability to use predictive models, our success rate in forecasting the future is not very good.


"...we are demonstrably arrogant about what we think we know"we have a built-in tendency to think that we know a little more than we actually do" This can get us into serious trouble..."

Nassim Taleb, 2007

We suffer from epistemic arrogance, ie as our knowledge grows, so our confidence increases significantly. This can result in over-confidence which causes an increase in confusion, ignorance and conceit. In fact

"...epistemic arrogance bears double effects: we overestimate what we know, and underestimate uncertainty, by compressing the range of possibile uncertain states, ie by reducing displays of the unknown......longer the odds, the larger the epistemic arrogance..."

Nassim Taleb, 2007

Furthermore, we have a tendency to favour underestimating the impact of unexpected events. This is more pronounced the further we are away from the event.

There is little difference between guessing and predicting, ie

- guessing (what I don't know, but what somebody else may know)

- predicting (what has not taken place yet)

Giving people more information does not necessarily improve the decision-making. People will select information that confirms their point of view (confirmation bias) and will suffer from belief perseverance (the tendency not to change opinions we already have). Many experts are narrowly-focussed people who suffer from a combination of confirmation bias and belief perseverance. Furthermore,

"...The problem with experts is that they do not know what they do not know..."

Nassim Taleb, 2007

In fact, many experts are worse predictors than amateurs!!!!!

"...experts were lopsided: on the occasions when they are right, they attributed it to their depth of understanding and expertise; when wrong, it was either the situation that was to blame, since it was unusual, or, worse, they did not recognize that they were wrong and spun stories around it. They found it difficult to accept that their grasp is a little short......humans are the victims of an asymmetry in the perception of random events. We attribute our successes to our skills, and our failures to external events outside our control, namely their randomness..."

Nassim Taleb, 2007


"...statistically sophisticated or complex methods do not necessarily provide more accurate forecasts than simpler ones......the problem is that we focus on the rare occasions when these methods work and almost never on their far more numerous failures..."

Nassim Taleb, 2007

Linked with tunnel vision or 'tunnelling' is anchoring, ie

" lower your anxiety about uncertainty while producing a number, then you anchor onto it......use reference points in our heads.....start building beliefs around them because less mental effort is needed to compare an idea to a reference point than to evaluate it......we cannot work without a point of reference..."

Nassim Taleb, 2007

In summary, when looking at history we suffer from randomness (incomplete information) or "triplet of opacity", ie

"...a. an illusion of understanding, or how everyone thinks he knows what is going on in a world that is more complicated (or random) than he realizes;

b. the retrospective distortion, or how we can assess matters only after the fact, as if they were in a rearview mirror (history seems clearer and more organized in history books than in empirical reality); and

c. the over valuation of factual information and the handicap of authoritative and learned people, particularly when they create categories..."

Nassim Taleb, 2007

  • Many organisations need to review their mindsets and practices to help them survive in uncertain times. With an increasingly unpredictable, complicated and volatile environment, many accepted practices and core businesses (products and/or services) need reviewing. Beware of making decisions which are based on old assumptions, eg high barriers to entry, high transaction costs, few capable competitors, growing and increasingly affluent markets, restricted information flows.
  • Generally human beings have a tendency to embrace information that reinforces their pre-existing views, while challenging or rejecting information that questions these views.

Many established management tools, such as net present value, are built on a foundation that assumes certainty, ie forecasting likely cash flows and discounting them. In a volatile business environment, this thinking is not advisable

Our traditional approach to handling uncertainty and the resultant chaos is to introduce more rules and regulations !!!!!!! This does not work.

One way to handle uncertainty and unexpected events is to have a wide spread, or diversification, of your exposure to risk, ie a small percentage in risky and speculative ventures and the balance in less risky and more conservative activities.

Furthermore, you need to develop ways to work around the inherent unpredictability and even exploit it, ie handle the unknown unknowns. Some recommendations include

- make a distinction between positive and negative contingencies - negative ones can hit hard and hurt severely, eg a big budget movie that is a box office failure. Positive ones can involve losing small to gain big, eg a new, cheap book that has the potential to be a bestseller. You need to know where your ignorance lies and have a precise understanding of the structure of uncertainty.

- don't look for the precise - remember that chance favours the prepared, and invest in preparedness, not the prediction. Making predictions tends to narrow our focus and makes us more vulnerable to the events that we do not predict.

- be very opportunistic - strenuously chase opportunities and maximize exposure to them. This stresses the importance of networking.

- avoid people who make predictions and be wary of planners - remember that planners, especially governments and their public servants, are not good at making accurate predictions


"...I will never get to know the unknown since it is unknown. However, I can always guess how it might affect me, and I should base my decisions around that......the probability of a very rare event is not computable; the effect of an events on us is considerably easier to ascertain......we can have a clear idea of the consequences of an event, even if we do not know how likely it is to occur......this idea that in order to make a decision you need to focus on the consequences (what you can know) rather than the probability (which you cannot know) is an essential idea of uncertainty..."

Nassim Taleb, 2007

People like Warren Buffett (Barrie Dunstan, 2009) observed that the lesson learned from experience is that we learned nothing from experience!!!!!!! By the time the lessons are needed, a new generation has either forgotten them or not been taught them. Furthermore, this leads into the phenomenon "creeping determinism", ie

"...the sense that grows on us, in retrospect, that what has happened was actually inevitable - and the chief effect of creeping determinism...... is that it turns unexpected events into expected events..."

Malcolm Gladwell, 2009

The GFC has discredited most mathematical models that endeavour to forecast the future, especially those that used the activities of the past to predict the future and have not incorporated the psychological elements of human behaviour in decision-making. This is linked with the rational-irrational dichotomy and optimistic-pessimistic distinction. We tend to swing from irrational-pessimism, ie doom and gloom, to irrational-optimism, ie exuberance that encourages uncontrollable speculation and risk taking. Furthermore some of the assumptions are not valid, eg most macroeconomic frameworks have treated institutions, like Fannie Mae and Freddie Mac, as neutral. Based on what has happened in GFC, these institutional frameworks are far from neutral in their impact. Fannie Mae and Freddie Mac handle around 50 percent of all mortgages in the United States and they got into financial strife during the GFC.

Some more thoughts on the deficiencies of conventional, traditional financial modeling, ie

i) markets are not efficient despite the use of frameworks around the efficient market hypothesis (EMH), such as capital asset price model, the Black-Scholes option pricing model, modern risk management techniques, market-to-market accounting, market cap indexing, concept of shareholder value. Even the US Federal Reserve Bank fell under the spell of "markets know best".

ii) evaluating relative performance, via the use of, for example, alpha and beta (active return and market return), etc results in managers' tendency to over-diversify because of their fear of underperforming against the benchmark. The aim should be to maximize total returns after-tax and should be to maximize rather than to benchmark. The only way to produce a superior performance is to do something different

iii) this time it is different - remember that no one has the ability to predict the future with accuracy. Furthermore, a behavioural bias that we can influence the outcome of uncontrollable events, interpreting information in a way that supports self-interest and with a common focus on the short-term, will provide an illusion of control

iv) valuation matters - indicators such as price/earnings ratio are useful, eg buy stock when ratio is low, and sell when ratio is high. Need to keep emotions and sentiment away from decision-making as that swings from greed to fear

v) adopt a disciplinary approach - be patient and wait for the best time to buy rather than chasing every swing

vi) be careful of leverage - it can turn a good investment bad.

vii) complex mathematical models can hide the real risks - this results in obsession with needless complexity, ie

"... mathematics is......considered as producing precise and dependable results: but in the stockmarket the more elaborate and abstruse the mathematics, the more uncertain and speculation are the conclusions..."

Benjamin Graham as quoted by Barry Dunstan, 2010

viii) macro picture matters - need to understand macro and micro approaches

ix) cheap insurance - this is useful in a portfolio as it protects us from the known unknowns, such as inflation, bad monetary policy, poor government decisions, etc

x) most models are based on assumptions that are generally assumed to be fixed and stable. If these assumptions are taken to be random and/or changeable, most conventional models are of limited use. For example, the notion of competitive advantage, ie countries should focus on what they do best. Yet if commodity prices fluctuate, this competitive advantage might no longer be advantageous. Furthermore, the notion of competitive advantage is a basis for globalisation, ie efficiency, but in reality the systematic imperfections can distort this.

Another example is the attitude to debt. A positive attitude towards debt implies confidence in the future and a high degree of reliance on forecast. Yet

"...forecasting is harmful since people (especially governments) borrow in response to a forecast (or use the forecast as a cognitive excuse to borrow)...... borrowing makes you more vulnerable to forecast error..."

Nassin Taleb, 2010

Need to be careful of the concept of socialisation of losses and privatisation of gains. Alternatively,if a bank needs to be bailed out it should be nationalised; otherwise banks should be free, small and risk-bearing.

Furthermore, according to Taleb (2010), we

- need to make sure that any incentive or bonus system includes a disincentive for poor performance. Currently incentives system are asymmetrical, ie reward positive performance but no disincentives for poor performance.

- the complexity from globalisation and highly networked economic life needs to be countered by simplicity in financial products. Most complex financial products (eg hedging products) are not fully understood, and as a result should be banned

- governments should not need to restore confidence; the system should be robust enough to handle adverse rumours

- need to be careful of using leverage to handle our debt crisis as it is not a temporary problem; rather it is a structural one

- the market is not the final arbitrator

- need to look at converting debt into equity, marginalizing the economics and business school establishments, banning leverage buyouts, reducing the bonus system, reducing risk-taking amongst bankers, educating people to handle uncertainty and not allowing organisations to become too big to fail

The GFC highlighted the concept of some financial institution being 'too big to fail' (The Economist, 2013a), ie

- GFC started in USA (2008) with Lehman Bros going bankrupt & Barclays buying its US operations; Merrill Lynch absorbed by Bank of America; AIG & Citigroup bailed out, etc

- spreading to European economies, ie Greece, Spain, Ireland, Iceland, Italy, etc

- Citigroup accepted US$143 b loan losses; Deutsche Bank raised US$3.8 b

- bank revenue fell by 1/3 (about $100 b); staff pay fell; employment plunged; more complicated regulation, ie limit bonus payments & hold more capital

- by 2013, European banks were suffering, ie UBS, Credit Suisse; with US's JPMorgan Chase, Goldman Sachs & Citigroup dominating in Europe

Mother Nature is a complex system that has developed ways to handle the unknowns. It is a

"...webs of interdependence, non-linearities and a robust ecology (otherwise it would have blown up a long time ago)..."

Nassin Taleb, 2010

- it has developed backups, eg in the human body we have 2 eyes, 2 lungs, 2 kidneys, etc. These backups are insurance, eventhough there are obvious inefficiencies in costs and energy usage in maintaining these spare parts.

- does not like over-specialization as it limits evolution and weakens the system

- works against largeness. For example, if one removes a large land animal like an elephant, the whole eco-system does not collapse. Yet the fear that one large bank failure (Lehman Brothers) could bring down the entire system was obvious in 2008.

- robustness is important as we are unable to correct mistakes and eliminate randomness from social and economic life. The challenge is to confine this like Nature does.

3. Not Understanding Organisational Culture (including behaviour of Complex Systems)

Not understanding the culture of the organisation that you are working with and/or trying to impose your views of what should be done.

"...corporate culture is manifest in distinctive patterns of human behaviour based on core values, beliefs and traditions. Culture is tangible by corporate lore, ceremonies, celebrations of achievement and institutional comportment, as well as through a company's goals, strategies, management processes, structure and methods of allocating resources..."

Lawerence Fisher, 2005

"...once members of the organisation begins to adopt ways of working and criteria for making decisions by assumptions, rather than by conscious decision, then those processes and values come to constitute the organisation's culture......culture is a powerful management tool......culture enables employees to act autonomously and causes them to act consistently..."

Clayton Christensen et al, 2003

To handle new problems, challenges, etc it is easy if the organisation's capabilities reside primarily in the people; if the capabilities reside more in processes and values, to the extent they have become embedded in the culture, change can be very difficult to achieve.


"...The power of a belief extremely deep-rooted and respected, sometimes above all other considerations. It shows us that culture has the capacity to transform or entirely dominate our biologically ingrained instincts, and that we should never underestimate its power..."

Robert Winston, 2003

"...culture is perhaps the hardest area to influence but fundamental to long-term success..."

Sam Palmisano (IBM) as quoted by Rosabeth Moss Kanter, 2008

Not understanding the 5 main functions of culture (Marcella Bremer, 2012), ie

i) it provides collective security or reduces collective insecurity, ie "it's the way we do things around here and what we believe in" or 'this is how things are'

ii) it determines social hierarchy, ie it gives people a position; it determines the leaders and is a stabilising factor

iii) it provides continuity, ie share common language, values, beliefs, behaviours and standards; we copy them and encourage others to adopt them. At the behavioural level it is passing on 'the way we do things around here'

iv) it provides a shared identity and familiarity, ie provides a sense of belonging and being appreciated which is a very basic human need

v) provides a vision of the future, ie staff know where heading

Not appreciating the elasticity of culture, ie

" can liken the culture of an organisation to an elastic band - you can stretch the culture to a different shape...... it will spring back to what it used to be, just like an elastic band......cultural change isn't something that will happen overnight, you've got to put the effort in and keep on putting the effort in for a long time for the cultural elasticity to wane..."

Paul Hampton, 2009

A healthy corporate culture is important for organisational performance. To improve performance it is easier to adapt and modify the positive elements of the current culture rather than trying to create a new or different culture. This can be linked to asking the following questions

- what kind of organisation do you want to be?

- what is the organisation's aspiration?

- what would the improved culture look like?


"...culture is deep, pervasive, complex, patterned, and morally neutral..."

Edgar Schein, 2004


"...culture is multidimensional, multifaceted phenomena, not easily reduced to a few major dimensions. Culture ultimately reflects the group's effort to cope and learn; it is the residual of a learning process. Culture......not only fulfils a function of providing stability, meaning, and predictability in the present but is a result of functionally effective decisions in the group's past..."

Edgar Schein, 2004

Most times you have to overcome your own cultural prejudices about the "right" and "wrong" way to do things.

Culture is essential for understanding the inter-group conflicts within the organisation, leadership within the organisation, how the organisation functions in relation to internal and external factors, its behavioural and attitudinal consequences, etc. The elements of culture revolve around what in the group is shared or held in common, such as the norms, values, behavioural patterns, rituals, traditions, assumptions, beliefs, communications, language, etc.

For any manager, especially a new one, the prerequisite for survival and success is to understand both the culture and the politics of the organisation.

Several critical elements to the concept of a shared culture are structural stability, breadth, and patterning or integration

i) structural stability (once a group has a sense of group identity, it is the major stabilising force that is not easily changed or given up, ie

"...culture is hard to change because group members value stability in that it provides meaning and predictability.........culture is a set of learned solutions that produce success, comfort, and identity, but they may try to change the very things they value and need..."

Edgar Schein, 2004

ii) depth

"...culture is the deepest, often unconscious part of a group and is, therefore, less tangible and less visible than other parts......when something is more deeply embedded it also gains stability..."

Edgar Schein, 2004

iii) breadth (once culture has developed, it covers all the group's functions)

"...culture is pervasive; it influences all the aspects of how one organisation deals with its primary task, its various environments and its internal operations..."

Edgar Schein, 2004

iv) patterning or integration

"...culture somehow implies that rituals, climate, values, and behaviours are tied together into a coherent whole; this patterning or integration is the essence of what we mean by culture. Such patterning or integration ultimately derives from the human need to make an environment as sensible and orderly as we reduce the anxiety by developing a more consistent and predictable view of how things are and how they should be..."

Edgar Schein, 2004

In summary

"...organisational cultures, like other cultures, develop as a group of people struggle to make sense of and cope with their worlds..."

Edgar Schein, 2004

Remember: continual reinforcement elements of the culture, such as beliefs, values, etc become less obvious to the group and evolve into being non-negotiable elements; they gradually go out of awareness and come to be taken for granted as part of the identity of the group (they become assumptions that are non-negotiable).

Definition of group culture is

"...a pattern of shared basic assumptions that was learned by a group as it solved its problems of external adaptation and internal integration, that has worked well enough to be considered valid and, therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to these problems..."

Edgar Schein, 2004

As claimed by Loizos Heracleous et al (2006), play is an important way to develop shared language, identity and social practices. Furthermore, play can provide a safe environment for introducing new ideas about market opportunities, generating debate about important strategic issues, challenging widely-held assumptions and building a sense of common purpose.

There are 3 levels at which culture can express itself: artefacts, espoused beliefs and values, and underlying assumptions (see Volume 3 for a technique that expands on this).

v) artefacts include the visible organisational structures and processes;

vi) espoused beliefs and values include strategies, goals and philosophies (espoused justifications) which are expressed in various plans (strategic, corporate, business, etc);

vii) underlying assumptions include unconscious, taken-for-granted beliefs, perceptions, thoughts and feelings (ultimate source of values and action). The basic underlying assumptions (theories-in-use) are the most important and can be the hardest to understand, ie

"...the implicit assumptions that actually guide behaviour, that tell group members how to perceive, think about, and feel about things. Basic assumptions......tend to be non-confrontable and non-debatable, and hence are extremely difficult to change. To learn something new in this realm requires us to resurrect, re-examine and possibly change some of the more stable portions of our cognitive structure......such learning is intrinsically difficult because the re-examination of basic assumptions temporarily destabilises our cognitive and interpersonal world, releasing large quantities of basic anxiety..."

Edgar Schein, 2004


" is in the psychological process that culture has its ultimate power. Culture as a set of basic assumptions defines for us what to pay attention to, what things mean, how to react emotionally to what is going on, and what actions to take in various kinds of situations. Once we have developed an integrated set of such assumptions - a thought world or mental map - we will be maximally comfortable with others who share the same set of assumptions and very uncomfortable and vulnerable in situations where different assumptions operate, because either we will not understand what is going on, or, worse, we will misperceive and misinterpret the actions of others......we can also think of culture at this level as the group's DNA, so if new learning or growth is required, the genes have to be there to make such growth possible and the autoimmune system has to be neutralised to sustain the growth. In any case, the two keys to successful cultural change are (1) the management of the large amounts of anxiety that accompany any relearning at this level and (2) the assessment of whether the genetic potential for the new learning is even present..."

Edgar Schein, 2004

Some other elements of culture that need to be addressed include defining

- a common language for communications and common conceptual categories that permit interpretation of what is going on (remember: people cannot tolerate too much uncertainty or stimulus overload)

- group boundaries and identity (What are the criteria for deciding who is in and who is out, ie inclusion and exclusion from the group? How is position and identity within the group determined?)

- power and status (how are influence, power and authority allocated?)

- allocation of rewards and punishment (what is the system of sanctions for obeying or disobeying group norms and rules, etc?)

- how unmanageable events are handled and explaining the inexplicable events (how is the organisation's history - written or oral - used to handle unpredictable and uncontrollable events that will impact on the group's survival?)

- internal integration and external adaptation (what are the external environmental limitations on the group? How does the group handle these external environmental limitations?)

NB Underlying all these elements is leadership (what role does leadership play in determining how the group handles things, such as determining the norms, rules, languages, reward systems, etc and unexpected events?)

Linked with understanding the culture is a limitation on using organisational typologies such as coercive, utilitarian, normative, hierarchical, autocratic, paternalistic, consultative, participative, delegated, etc., models, ie

"...typologies can be useful if we are trying to compare many organisations but are quite useless if we are trying to understand one particular organisation......the difficulty is that within any organisational type one may see variations.......The problem is that in many organisations the subcultures conflict with each other..."

Edgar Schein, 2004

Within an organisation's culture, sub-cultures can develop; it is useful to consider 5 criteria for the differentiation of sub-cultures:

i) functional/occupational differences (different occupations have different shared assumptions because of the differing core technology used in each occupation, eg professionals such as engineers, doctors, lawyers, accountants, etc will differ from each other in their basic beliefs, values and underlying basic assumptions because they are doing fundamentally different things, have been trained differently, and have acquired a certain identity in practising their occupation. Another example is sales staff dealing in daily face-to-face contact with customers, whereas the marketing staff deal with the data, long-term strategy, broad concepts and sales tools such as advertising and promotional programs; this has often resulted in marketing seeing themselves as being of higher status than sales. To achieve marketing and sales co-operation requires the appropriate recognition system plus a common language and common shared experiences)

ii) geographical decentralisation (geographically dispersed customer base that needs close contact and often requires different goods and services; local cost advantages including labour, raw materials; located near suppliers; preference for locally-produced products and services)

iii) differentiation by product, market or technology (this is linked with different kinds of people with different educational levels and occupational experience being attracted to different businesses, and the interaction with the customer requires a different mindset and leads to different kinds of shared experiences)

iv) divisionalisation (this is linked with decentralising functions based on products, markets or geographical units)

v) differentiation by hierarchical level (this is based on tasks, rank, occupation and position within the hierarchy of the organisation)


" of the quickest ways of diagnosing the direction in which an organisation's culture is heading is to track the occupational and subcultural origins of the people being promoted into senior positions..."

Edgar Schein, 2004


"...culture is a stabiliser, a conservative force, a way of making things meaningful and predictable. Many management consultants and theorists have asserted that "strong" cultures are desirable as the basis for effective and lasting performance. But strong cultures are by definition stable and hard to change. If the world is becoming more turbulent, requiring more flexibility and learning, does this not imply that strong cultures will increasingly become a liability? Does it not mean, then, that the process of culture creation itself is potentially dysfunctional because it stabilises things, whereas flexibility might be more appropriate? Or is it possible to imagine a culture that, by its very nature, is learning-oriented, adaptive, and flexible. Can one stabilise perpetual learning and change? What would a culture that favours perpetual learning and flexibility look like"......what is the direction in which the leaders of today should be pushing cultural evolutions so that there are other surprises of tomorrow? What sort of characteristics or skills should a leader have to perceive the needs of tomorrow and to implement the changes needed in order to survive..."

Edgar Schein, 2004

Not understanding

" deeply our own perceptions, thoughts, and feelings are culturally determined". Ultimately, we cannot achieve the cultural humility that is required to live in a turbulent culturally- diverse world unless we can see cultural assumptions within ourselves. In the end, cultural understanding and cultural learning starts with the self inside..."

Edgar Schein, 2004

In looking at culture, too much focus can be on the current cultural elements that hinder development of the desired change and not enough on the elements that will assist the change process. Furthermore,

"...considerable change can take place in an organisation's operations without the basic cultural paradigm changing at all"..The constancy of a core set of deep beliefs, values, and assumptions is also one of the keys to longevity of organisations as shown in the Collins and Porras study of successful organisations..."

Edgar Schein, 2004

NB The Collins and Porras study is published under the title "Built to Last", (1994, HarperBusiness)

Some of the signs in organisational cultures that display dysfunctionality include

- culture of "no" - organisations dominated by cynics and critics who will always find a good reason not to do something, ie

"...piling on criticism is an easy way to avoid taking risk and claim false superiority"It is especially likely in organisations that are divided into large subunits or segments, led by local leaders with great power who are often unwilling to comply with directives from above..."

David Garvin et al, 2005

- too much concentration on process - this results in confusion of ends and means, form and content, ie

"...How you present a proposal becomes more important than what you propose......despite the appearance of progress there is little real headway..."

David Garvin et al, 2006

- diversification as a smoke screen - to avoid facing challenges/problems in their core business, staff will focus on diversification via new products and/or services, and/or new lines of business

- dysfunctional routines are hidden - often dysfunctional routines are hard to spot because so much is placed under cover, ie

"...politics triumphs over substance, staff meetings become empty rituals, and meddling becomes the norm..."

David Garvin et al, 2006

- paralysis by analysis - the organisation's inability to set a definitive course of action; there is continual fine-tuning of proposals and reports but no decision. This is most common in perfectionist cultures where mistakes are career threatening and people 'who rock the boat' drown

- head down, bunker mentality - management repeatedly proclaims a state of crisis but takes no action. As a result, staff are reluctant to respond to management directives, with most staff believing that the wisest course of action is to ignore new initiatives, or work around them, or 'sit on the fence' until they go away.

- passive-aggressive, ie

"...a place where more energy is put into thwarting things than starting them, but in the nicest way......organisation's quiet but tenacious resistance, in every way but openly, to corporate directives.......people pay those directives lip service, putting in only an effort to appear compliant. Employees feel free to do as they see fit because there are hardly ever unpleasant consequences, and the directives themselves are often misguided and now seem worthy of defiance. Making matters worse, senior management has left unclear where accountability actually lies, in effect absolving managers of final responsibility for anything they do. Those with initiative must wait interminably for a go-ahead, and actions when finally taken are accompanied by a chorus of second guessing, a poor but understandable substitute for the satisfaction of accomplishing the task at hand......when employees' healthy impulses - to learn, to share, to achieve - are not encouraged, and other harmful but adaptive contact gradually takes over. It is no wonder that action of any kind becomes scarce and the erstwhile doers find safety in resisting unpromising efforts.......such companies have generally more time than others to accumulate and institutionalise dysfunctions, and their people are most cynical about reform attempts...... employees of such companies bear a passing resemblance to the "organisational man" of 1950s sociology and literary fiction. In the post- war era, when US corporations dominated the domestic markets and enjoyed stable market shares, personal initiative and risk-taking were understandably seen as disruptive rather than opportunity seeking......problems develop gradually as a company grows, to a series of well intended but badly implemented organisational changes one upon another. Passive aggressive organisations are, therefore, most commonly large, complex enterprises whose seeds of resistance were often sown when they were much smaller......the additional layers make it difficult for people in the organisation to understand who bears responsibility for specific results. Some managers become reluctant to make decisions, and others won't own up to the ones they made, inviting colleagues to second-guess or overturn them. An already passive aggressive organisation grows increasingly so as its people become more certain of the acceptability of such conduct. Resistance becomes entrenched, and failure to deliver on commitments becomes chronic......failure to deliver on commitments becomes acceptable as long as one has a reasonable excuse......regardless of how they arrived where they are, passive aggressive organisations are usually the sum of a series of ad hoc decisions or events that makes sense in the moment, but has the effect of gradually blurring decision rights. Other times such shot gun arrangements outlive their individual rationales, and the organisation loses all messages of coherent overall plan ......unhealthy organisations, where dysfunction is rooted in a fundamental mis-alignment of four basic building blocks of the organisation: incentives or, more broadly speaking, motivators; decision rights; information; and organisational structure. In passive-aggressive organisations, the misalignment generally involves complicated indirection amongst all four, which together conspire to freeze initiatives"Ineffective motivators......Passive-aggressive organisations are exceptionally poor at providing evidence, often failing to judge and reward individuals according to their business value to the organisation - or even to distinguish better performance from some cases, the rewards given to certain job titles seem incommensurate with their functions' overall contribution to the firm. People who expect their efforts to be unrecognised or to be inadequately valued put in just enough effort to stay out of trouble, since they have no reason to believe that any extra effort or initiative will lead to additional rewards or superior results.......Incentive systems communicated to the organisation"is what really matters to upper management. Corporate may send out countless memos about strategy, mission and goals, but management values are embodied in what it is willing to pay or otherwise recognise, which is one reason that the annual e-mail describing how bonuses will be calculated is the one that everybody not only reads but remembers......the job of senior management is to remind everyone else of the reality behind those symbols by connecting each manager's standing within the firm - size of office, size of bonus, access to superiors - to the firm's standing within the marketplace......unclear decision rights.....vaguely defined role to give the occupants "plausible deniability" when things go bad. The problem can always be said to be the responsibility of the next person, who can likewise shift blame elsewhere.......As a consequence, authority becomes fragmented. Where everyone has a say in making a decision, everyone thinks he has the right to stymie or reverse it after it has been made......deadlines don't matter; neither do other units' internal guidelines, since each can be overridden by the other.......Wrong information......employees......are often more interested in learning about what goes on inside the company than about the competitive realities that affect the firm's long-term survival......when in possession of information or knowledge of genuine value, employees of passive-aggressive organisations are reluctant to share it, since doing so frequently benefits the recipient more than the organisation already rife with meddling, where many managers find that providing information gives the recipients a pretext to interfere......Misleading structure. Because individuals in passive-aggressive companies often lack clear measures of how they add value, they must instead rely on the organisation chart as a map of relative status - focusing on how many direct reports they have, how many levels away from the CEO they are, or whether their immediate supervisor is a favourite......passive-aggressive organisations are, by definition, uniquely resistant to change and are therefore uniquely difficult to rehabilitate ......managers there have long had the attitude that "this too shall pass" when presented with a change program - and always they have been right..."

Gary L. Neilson et al, 2005

If there is an environment of suppression of dissent, it will work against the change process.

Linked with culture is understanding networks (formal and informal) within the organisation. The networks and the way they operate demonstrate how an organisation works (see network mapping in Volume 4).

According to Michael Mauboussin (2009), in handling complex systems like organisations, managers make 3 common mistakes:

i) incorrectly extrapolating individual behaviour to explain collective behaviour. You need to focus on the aggregate and not just the components.

ii) failing to recognize that changing one component of a complex system has unintended consequences. It is like throwing a pebble into a pond of water: there is a ripple effect.

iii) tending to focus on a few key individuals while ignoring their surrounding support systems. There are many instances of hiring a star performer who does not continue to perform when separated from the people, structures and norms that made them star performers in the first place.

We don't encourage learning from mistakes. There is a focus on punishment for mistakes and this often leads to CYA-type behaviours

Not understanding the importance of negative feedback. In the market place, people's behaviours readily swing from greed to fear; with greed creating "bubbles" that eventually burst and fear creating panic. Negative feedback is a way of keeping things in check; positive feedback, in contrast, builds on itself and can accentuate the swings

4. Not Understanding Situational and Contextual settings


It needs to be remembered

"...human beings turned out to be creatures that are quite context-or-site specific. We require actions, behaviors, thoughts, skills in one situation, and we may master these......we maintain those features in the setting in which they have been learned......But we are loath to apply skills or concepts widely, let alone promiscuously. Speaking more generally, the mind is organized not as an all-purpose computer; it is more precisely conceptualized as a set of relatively independent modules. Just how or when or why these modules should connect remains obscure to many theorists of is useful to keep in mind that, as a species, we evolved to survive indistinctive ecological niches; we did not evolve in order to have correct theories, to master disciplines, or to transfer lessons encountered in one setting approximately to another..."

Howard Gardner, 2006a

Furthermore, what has been successful in the past, such as concepts, techniques, strategies, approaches, frameworks, etc often fails in new situations as different contexts require different kinds of responses. Each situation should be recognized for what context governs it, with responses to that situation adjusted accordingly.

There is no one size fits all. Just because something works in health, education, etc, it does not follow that it will be effective in the finance industry, for example.

Some classic Australian examples of what has worked in the one organisation will necessarily work in another organisation are:

- Peter Smedley's work in Mayne Nickless. The successful approaches he adopted in Shell (oil) and Colonial (banking) were unsuitable for Mayne Nickless (health). 

He spent the first 29 years of his career at the energy giant Shell when it was at the forefront of strategic thinking.In 1993 he took charge of the life insurance group (Colonial) for 9 years, making 17 acquisitions, including the State Bank of New South Wales, Prudential, Legal and General, etc. This turned Colonial from a A$ 1.0 b under-performer to a diversified global financial services heavyweight by introducing a new distribution structure and working on its strength in fund management. In 2000, the Commonwealth Bank paid A$ 9 b.for Colonial,

Next he became CEO of healthcare and logistics giant, Mayne Nickless (2000). After 2 disastrous years, he was removed owing to significant profit declines, shares price falling and doctors in revolt as he treated them like employees rather than customers. The health sector's markets are more complex and demanding than oil and banking; vigorous centralisation did not work, ie not responsive to local needs; rapid acquisitions created operational difficulties. Furthermore, he took many of his 'successful' management team with him. He imposed a harsh cost-cutting model; reduced staff levels; left doctors out of the decision-making process. He didn't understand the culture of the medical professionals who value their independence and individualism, and the importance of the relationship with their patient. He did not realise that the most effective way to keep the medical profession on-side is to

"...make doctors' life easy, meet their demands, minimize hassles and red tape..."

 Pat Grier (Ramsay Health) as quoted by Fiona Tyndall, 2007

As a result of this, Mayne Nickless suffered a massive $456 m loss in its hospital division; more than $1 b was wiped off its share value. Thus little remains of Mayne Nickless, and Smedley has moved elsewhere!!!!!

- Alan Jackson built a manufacturing empire based on acquisitions, only to lose it; he then repeated this cycle

- Tony Berg was a hero of the growth-business model at Macquarie Bank but struggled at commodity-based Boral

- Peter Ritchie who successfully introduced McDonald's into Australia and is now stuggling with Australian licence for filtered water from USA (Culligan); it is "hard" water while most Australian prefer 'soft'.

Similar stories exist for David Hearn at Goodman Fielders; Phil Green and David Coe at Babcock and Brown; Andrew Scott as a retailer at Centro; Michael King as a developer in MFS.

(sources: Fiona Tyndall, 2007; Andrew Cornell, 2009a; Jason Clout, 2010)

Not understanding that the classic boom and bust of markets is repeated in behavioural cycles. Many managers go too far with their measures, eg in an economic downturn they drastically reduce staff and jettison project, etc as many managers become paralyzed by fear and inertia. Furthermore, many managers make questionable acquisitions in an upturn. This reaction in the downturn makes it difficult for organisations to make the most of when the market improves, such as acquisitions, research projects, development of new products, etc

"... history shows that companies that continue to pursue growth while economic conditions falter are in a much better position when the market improves..."

Dominic Holder as quoted by Catherine Fox, 2008d

Some tips to handle this situation are

- avoid knee-jerk reactions and savage cost cuts (as the latter takes years to recover from)

- communicate bad news quickly

- set goals for short, medium and long-term horizons

- leaders should try to identify patterns and thus opportunities as they emerge

- manage loose/tight

. Not understanding the importance of negative feedback. In the marketplace, people's behaviour readily swings from greed to fear - with greed creating "bubbles" that eventually burst, and fear creating panic. Negative feedback is a way of keeping things in check, while positive feedback builds on itself and can accentuate the swings

. Not realising that technology, like automation, is a 2 edged sword, as it brings improved productivity, convenience, speed, efficiency & effectiveness, but its impact on performance can be negative as it alters how we act, how we learn & what we know, ie weaken our awareness & attentiveness, and lulls us into a false sense of security (complete faith in the output)


Each context requires different actions. Simple and complicated contexts exist in an orderly universe, where cause-and-effect relationships are perceptible and right answers can be determined based on the facts. Complex and chaotic contexts are unordered - there is no immediate apparent relationship between cause and effect, and the way forward is determined by identifying emerging patterns. The ordered world revolves around fact-based management; the unordered world requires adaptive leadership.

5. Structural Inertia and Related Organisational Matters

Not understanding structural inertia - organisations are designed to promote stability and maintaining the status quo; with staff selected and trained to perform specific jobs, and they are rewarded for performing them in certain, pre-determined ways.

There are 3 institutional functions or norms that come together to produce structural inertia, ie behavioural norms, institutional order and social order. All are interconnected.

i) behavioural norms - the organisation instills a set of common beliefs based on shared behavioural values, ie particular positions within an organisation carry specific rights and responsibilities unique to the organisation. The resultant norms give rise to rules that detail how organisational members are supposed to behave. These guiding behavioural forces can become fixed, because of the preference for status quo, irrespective of the need to change or evolve.

ii) belief about institutional order - this involves organisational power and regulatory processes which include rule-setting monitoring and sanctioning activity that characterises the organisation. Generally, the power and processes support the status quo and consequently can work against change

iii) belief about social order - through symbols and elements, such as language, office space, titles, etc, people's mindsets are determined in relation to how they see the organisation and the world through the organisation. This narrow view of the world, through the organisation's filter, can work against change


"...Just as people are creatures of habit, organisations thrive on routines"Routines - the predictable, virtually automatic behaviours - are unstated, self-reinforcing, and remarkably resilient......they are, for the most part, functional and highly desirable. Dysfunctional routines, by contrast, are barriers to action and change. Some are outdated behaviours that were appropriate once but are now unhelpful. Others manifest themselves in knee-jerk reactions, passivity, unproductive foot dragging, and, sometimes active resistance. Dysfunctional routines are persistent, but now not unchangeable. Novelty - the perception that current circumstances are different from those that previously prevailed - is one of the most potent forces for dislodging routines. To overcome them, leaders must clearly signal at that context has changed..."

David Garvin, et al, 2005

Not appreciating that resistance is a normal reaction to change. If people are faced with ambiguous or uncertain situations, where they feel they do not know what to expect, they will resist moving to those situations (uncertainty principle)

The change process can be perceived as, and often is, a threat to the existing balance of power and power bases within an organization, ie

"...if changes are made in respect to who's in charge and how things are done, a shift in the balance of power between individuals and organisational subunits is likely to occur. Those units that now control resources, have the expertise, and wield the power may fear losing their advantaged position as a result of any organisational change..."

Dennis Hall, 2006a

According to Robert Sutton (2007), many research studies show that people in positions of power in organisations tend to abuse their position, ie

"...The idea that power corrupts people and makes them act as if they are above rules meant 'for the little people' is widely is astounding how rapidly even tiny and trivial power advantages can change how people think and act - usually for the worst..."

Robert Sutton, 2007

As they enjoy constant deference and false flattering, they feel more important. This is shown by

- talking more

- listening less

- taking what they want for themselves irrespective of others' needs

- ignoring other (less powerful) people's wishes and comments

- indifference to how less powerful people react to their behaviour

- acting more rudely

- giving themselves excessive credit for good things that happen

- blaming others when things go wrong

- generally treating any situation or person as a means to satisfy their own needs, ie

"...being put in positions of power blinds them to the fact that they are acting like jerks..."

Robert Sutton, 2007

Management assumes

"...organisations act like individuals. They don't..."

Peter Drucker as quoted by Geoffrey Colvin, 2005b

Not realising that to change culture, ie the way we do things around here, there needs to be alignment of behaviours, attitudes, physical setting and operations, etc; need to adopt a holistic approach

Not understanding the law of unintended consequences, iein responding to various situations, management usually overacts and does the wrong thing

Organisational transition usually requires more time and energy from employees than they can easily provide - this can put increasingly complicated pressures on their private lives. It has been found that success at home and at work can reinforce each other. Sometimes people allow business agendas to clash with, and override, personal agendas. In these situations they spend less time with their families, give up caring for themselves or cut back on sleep. These strategies are actively self-perpetuating. At times human physiology is out of synch with society's around-the-clock performance demands, eg sleep deprivation played a significant role in disasters like the Exxon Valdez oil spill and the Challenger explosion.

Failing to find out where people are coming from, thus unable to connect with them and engage them in the change process. Hearing the stories is not the same as taking what they say at face value. People naturally, even unconsciously, defend their habits and ways of thinking and attempt to avoid difficult value choices. After hearing their stories, you can be provocative by making an interpretation that gets below the surface, ie you have to listen to the song beneath the words

Not realising that organisational transition is a social process taking place over a period of time during which people and systems must undergo significant change, learning, adaptation and growth. Organisational transition is not a "static and a one-decision" event.

Fiefdom, silo, cocoon, territorialism, kingdom and stovepipe culture dominates, ie know everything about their area but little about the whole organisation and are very protective about their own area of responsibility. This can result in holding back information and has a negative impact on responsibility, ie it is someone else's responsibility and so no-one ever acts. In other cases, one part of an organisation is vested with too much responsibility for a particular issue. Other parts of the organisation, including those with important information or perspectives, are not consulted or are even actively excluded from the decision-making process. This results in a too narrow perspective and potential problems go unrecognized or are given too little priority. In other words, this culture causes organisational parochialism as

"...decision-makers focus on an impact horizon that is too narrow, neglecting the implications of the constituencies..."

Michael Watkins et al, 2003

Not realising the important capabilities of managing time, help, relevance, and consistency of their values and behaviour must be developed under high pressure

Not focusing on the high leverage changes that will have an immediate, positive and visible impact

Not appreciating that time delays are involved in profound change. Don't judge the ultimate failure or success of efforts only on early results. Keep away from the expectation of "quick fixes"

Too much isolation - the deeper and more effective changes are, the more likely conflicts will arise within the organisation. The more people do change, the more different they become in thinking and acting from the mainstream culture. The more these "changed" people succeed in producing significant advances in practical results, the more potentially threatening they become to others competing with them for management attention and reward.

Not handling some of the dilemmas of change, ie

- adaptive or rational strategy development

- cultural or structural change

- continuous improvement or radical change

- empowerment or command and control

- economic or social goals

Too much zeal - the more personal and business results the "changed" people achieve, the more arrogant and intolerant they become towards the rest of the organisation. Zealots can be dangerous as they frequently set the wrong pace by failing to respect the views, stakes and potential losses of their adversaries. Furthermore,

"...self-knowledge and self-discipline form the foundations of staying alive......every human being needs some degree of power and control, affirmation and importance, as well as intimacy and..... the desire to fulfill the needs of others can become a vulnerability if it feeds into our own normal hungers for power, importance and intimacy......they get so caught up in the action and energy that they lose their wisdom and self-discipline, and slip out of control......when you lead, you participate in collective emotions, which then generate a host of temptations: invitations to accrue the power of others; appeals to your own sense of importance; opportunities for emotional intimacy and sexual satisfaction......yielding to them destroys your capacity to lead. Power can become an end in itself...."

Ronald A. Heifetz et al, 2002

Management and staff regard themselves as "custodians of the organisational traditions"

Not realising that the absence of objections is not the same as active support

Not understanding the dichotomies, or paradoxes, of management, such as

- spending money on investment, such as buildings for training, that produce nothing, while closing down uncompetitive factories that produce goods

- paying the highest wages, while having the lowest costs. It is hard to hire and retain the best people and become the lowest cost provider of goods and services

- focusing on managing short-term, while not handling long-term. Reducing cost at the expense of the future can deliver some short-term benefits but can do significant damage in the long-term. Furthermore, dreaming about the future and not delivering in the short-term can be fatal

- need to be hard in order to be soft. Need a performance-based culture where both tough decisions and soft values are balanced

Many common management errors, such as silo mentality, chasing short-term and neglecting long-term targets, over-emphasising tangibles, not co-creating, not achieving staff buy-in, etc, can be classified under one title - "collective stupidity", ie what can go wrong will go wrong when it should not!!!! Karl Albrecht (2003) observed

"...intelligent people, when assembled into an organisation, will tend towards collective stupidity..."

Karl Albrecht, 2003

Be careful of "collective stupidity", ie when a group of intelligent people get together, they can still make stupid decisions, eg NASA and the Mars probe (one group of scientists used the metric measurement system to get a probe to Mars and the other group used the imperial system for the probe used to take pictures of Mars etc!!!!!!

Implementation of ideas, ie

When turning

"...ideas into action, trouble begins..."

Robert Kriegel et al, 1996

A misunderstanding that organisations (and staff) can be controlled. Sometimes these are called implementation problems that are linked with the behaviour of people. The premise behind this mechanistic, engineering approach is that you can predict the outcome of human behaviour and determine the right behaviour for staff. But people do not work in organisations like robots, by simply doing what they are told. Furthermore, there is a focus on the people rather than the process that aims for a sameness rather than encouraging diversity, creativity and the valuing of each employee as an individual; this focus does not take into account human differences

Not realising that participants need to move to being observers and back again, ie switching roles to simultaneously watch what is happening while it is happening. Simple strategies, such as pushing your chair a few inches away from the meeting table after you have spoken may provide the appropriate distance to detach yourself enough from the meeting to become an observer rather than a participant. Observe who says what; watch the body language; watch the relationships and see how people's attention to one another varies: supporting, rejecting, or listening; observe how status and prejudice work.

Very often the source of the crisis is a clash of values and a difference in parties. Sometimes solutions will temporarily smooth over the conflict but will not solve the underlying problem. This would require the different factions with competing priorities to acknowledge the gaps between them and work through the differences

Not realizing the need to orchestrate conflict. When tackling tough issues, conflict will occur. Unfortunately, many organisations are downright allergic to conflict, seeing it primarily as a source of danger which can generate casualties. On the other hand, deep conflicts consist of differences in fervently held beliefs and differences in perspective that are important in the change process. Learning and transformation occur by encountering differences that challenge our experience and assumptions and this requires engagement in something in the environment lying outside our perceived boundaries. One of the challenges of change is to work with differences, passions and conflicts in a way that diminishes their destructive potential and constructively harnesses their energy

To avoid getting hurt, you dress up the following defences: innocence is turned into cynicism and is called realism; curiosity turns into arrogance and masquerades as authoritative knowledge; compassion turns into callousness which becomes the thick skin of wisdom and experience

Not realizing that the flattening of organisational structures, and trends to outsourcing and virtual organisations, have emphasized the need for a different approach to change management that is sometimes called the lateral style. This involves developing capabilities from networking to coalition building to persuading and negotiating, and it revolves around relationship building

Not learning from failures. Too much focus on studying successes results in a

"...systematic bias towards success..."

Harry Onsman, 2005

Too much simplistic thinking or not thinking well. We need to get beyond rationalising, stereotyping, ignorance, greed and fear. We need to stop to think about what we believe. If this was done, we would see that the points on which we agree far outweigh the points on which we don't agree

There is a perception that the longer a change initiative takes, the more chance it has of failing, ie early impetus will disappear, windows of opportunity will close, objectives will be forgotten, key supporters will leave or their enthusiasm will wane, problems will accumulate, etc. On the other hand, if the project is regularly reviewed, it is more than likely to be successful. In other words, the time between reviews is more critical for success than a project's lifespan. It has been found that the likelihood that a change initiative will run into trouble rises exponentially when the time between reviews exceeds eight weeks; complex projects should be reviewed fortnightly. The best ways to review are to schedule milestones and assess, ie identify gaps and spot new risks. The most effective milestones are those that describe major actions or achievements rather than day-to-day activities. The review of these milestones is done formally and includes identifying any problems faced in reaching the milestones and how the achievements will impact the next phase of the project. Furthermore, senior executives need to pay special attention to the dynamics within the team and changes in organisational perceptions about the initiative.

Need to be careful of

- not managing upwards, ieyour relationship with your boss should be just as important as your relationship with key stakeholders, such as staff, customers, suppliers, etc. It should be one of mutual dependence (for more details, see Ingredient 4)

- micromanaging, ie unnecessary interference into your staff's duties. They will see it as the manager demonstrating lack of trust and/or confidence in them to be able to handle the situation. It can create a vicious cycle that is incredibly destructive

- setting people up to fail, ie giving somebody an activity that has no chance of success

- sink or swim principle, ie giving somebody an activity that has little chance of success

Not understanding "threat rigidity" - there is the tendency to refocus immediately on the core or mainstream activities of an organisation when things are not going well. This can be even at the expense of long-term solutions to the problem.

Not understanding "capital market myopia" - a view that does not consider the impact of other firms' decisions, especially financial, that will have an impact on their own decisions. This can lead to 'racing' behaviour, ie organisations compete to outspend each other. For example, a certain industry is the current 'flavour of the month' and as a result massive amounts of capital are focused on this industry; usually an investment bubble develops and bursts soon afterwards, eg dot-com and telecommunications investment bubbles in the late 1990s, and more recently, the margin lending and sub-prime phenomena.

Need to understand the importance of office politics which includes backstabbing, gossiping, skull-duggery, etc. in times of organisational change. In fact, it is a way of slowing down or blocking change initiatives (Brad Hatch, 2008a). Even staff who are not keen to get involved in office politics realize the importance of it in understanding what is happening in the organisation.

Need to understand that many rules and regulations are applied with the best of intentions but can get in the way of the application of practical wisdom or common sense.

"...practical wisdom is the ability to do the right thing, in the right way, at the right time, and for the right reasons..."

Barry Schwartz has quoted by Fiona Smith, 2010

Most rules are developed on the basis of a fundamental distrust of people's desire to do the right thing and to protect against the worst situation

6. Lack of "Buy-in" Ownership of the Change Agenda by Staff (especially the informal leaders)

Lack of "buy-in" and its consequent lack of ownership can result in an absence of relevance, involvement, understanding, agreement, acceptance, responsibility, credibility, participation and commitment - by people involved in the change, especially those who implement the change, ie not engaging staff fully. In other words,

"...the key is to engage the members of the community you want to change in the process of discovery, making them the evangelists of their own conversion experience..."

Richard Pascale et al, 2005


"...learning and change cannot be imposed on people. Their involvement and participation is needed in diagnosing what is going on, in figuring out what to do, and in actually bringing about learning and change. The more turbulent, ambiguous, and out of control the world becomes, the more the learning process must be shared by all members of the social unit doing the learning..."

Edgar Schein, 2004

Ideally, this involves staff understanding the organisation's direction and being involved in shaping each direction, ie they have the authority to influence and enact the change. This is over and above the 'traditional employment contract' of

- compensation (rewards and recognition), ie exchanging time and expertise for money

- employability, ie developing skills that increase marketability

- personal job satisfaction


"...People value their own conclusions more highly than yours..."

Annette Simmons, 2002

"...people are more likely to implement decisions willingly if they have been involved in them. As well as improving relations between workers and management, joint decision making can also help achieve greater levels of performance..."

Russell Lansbury as quoted by Fiona Smith, 2009f

Too often, management tries to achieve the buy-in into the change process after they have introduced it. This is too late. Buy-in must occur at the start of the change process.

"...Getting the buy-in to change after you introduce it is working b-ass-ackward..."

Robert Kriegel et al, 1996

Some ways to achieve "buy-in" and overcome staff ambivalence and/or resistance to change:

- usability lab- (where the proposed change of existing operations is subject to a close-to-real-world simulation including frontline employees interacting with customers, ie see the demonstrated benefits of change before their full-scale implementation)

- infuse the entire decision-making process with transparency and brutal reality. By doing this from the outset, the right decision often becomes self-evident. Full disclosure means going beyond the data, analysis and reasons to tapping into staff emotions and feelings, ie delivers a smack to the gut. This is sometimes called "see-feel-change" pattern. The emotional reaction will provide the energy that propels people to push along the change process

- use "chunking", ie break the initiatives down into manageable chunks. Many times staff become overwhelmed by their perception of the change process. To mitigate this impression, break the project down into discrete phases or steps, complete with interim goals that will demonstrate momentum and progress.

One of the most common complaints from senior management is the difficulty in getting staff to change their behaviours. Even when presented with the most brilliant strategy imaginable, most staff will shrug their shoulders and go back to the old ways of doing things even when the organisation's survival is at stake. Instructions from top management are rarely effective as most people are cynical. They have seen leaders and corporate change projects come and go. To handle the situation, it is important to get the informal leaders, eg movers and shakers, on side. These people have credibility within the organisation and show the desirable behaviours. Furthermore, they develop personal relationships and understand people management, ie treat people how they want to be treated. This is sometimes called "peer-to-peer" influence.

Not "co-creating" - it is important to take or bring staff with management during the change process. The support of the top management is a necessary, but not sufficient, condition for a change process to be successful.

It needs to be remembered that cultures cannot be formed arbitrarily; they grow organically over time. If management wants change an existing culture, it must first understand the current culture by talking with people who work in it. They need to identify and understand the driving forces of the current culture, as it is very hard to dictate cultural change from above.

"...Little significant change can occur if it is driven only from the top"...CEO proclamations and programs rolled out from corporate headquarters are a great way to foster cynicism and distract everyone from the real efforts to change" management buy-in is a poor substitute for genuine commitment and learning capabilities at all levels in an organisation. In fact, if management authority is used unwisely, it could make such commitment and capability less likely to develop..."

Peter Senge et al, 1999

"...organisational change is not a spectator sport, and it's easy to be a cynic when you're in the stands......It's tough to be a cynic when you're on the playing field..."

Dennis Donovan as quoted by Ram Charan, 2006b

Not encouraging staff who are "positive deviants" (they successfully challenge the status quo and are the best performers within the organisation). This means the leadership role within the organisation becomes more about facilitation, ie the CEO becomes chief facilitation officer (CFO) who helps identify the positive deviants and encourages their behaviours throughout the organisation.


"...the classic KAP (knowledge, attitude, practice) behavior-change model holds that knowledge changes attitudes, which in turn change practice. Positive deviant facilitators turn this upside down and they employ a PAK (practice, attitude, knowledge) approach instead. Once...... the community discovers who the positive deviants are and identify their change people's attitude through action. Why? Because people are much more likely to act their way into a new way of thinking than to think their way into a new way of acting..."

Richard Pascale et al, 2005

The Taoist sage Lao-tzu stated very succinctly:

"...learn from the people

plan with the people

begin with what they have

build on what they know

of the best leaders when the task is accomplished the people all remark we have done it ourselves..."

as quoted by Richard Pascale et al, 2005

Commitment rather than compliance or coercion is required. The latter tends to happen when change is driven from the top down and is usually driven by fear and distrust

People in a change process need to understand how they fit in, how they can contribute, and how they will benefit. If these needs are not met, a commitment gap develops and people will not support the change process, ie merely pay lip service

Too much cop and not enough coach

"...just a few decades ago, managers focused on processes, products, productivity and planning. They were cops and organizers assigning tasks and making sure you followed the rules. Their word was law, and they ruled with an iron hand. When the manager showed up at your office it was the equivalent of a highway patrol pulling up alongside your car......Today's managers......are essentially in the people business......this means motivating employees to be excited about change, overcoming employee resistance to change, and creating a culture in which innovation flourishes..."

Robert Kriegel et al, 1996

Top management suffers from "attention-deficit disorder" and has an enormous capacity for denial, ie

"it's only an execution issue"

"it's an alignment problem"

"we just have to get more focused"

"it's the fault of the regulators"

"our competitors are behaving irrationally"

"we are in a transition period"

"everyone's losing money"

"the rest of the world went bad"

"we're investing for the long-term"

"investors do not understand strategy"

Robert Kriegel et al, 1996

The obvious perils in being too focused on the wrong and unimportant issues such as

- the formal organisational structure rather than the informal one

- strategies rather than purpose

- tangibles (incentives, job descriptions, etc) rather than intangibles (winning their hearts and minds, morale, customer satisfaction rather than loyalty, etc).

In other words, too much focus on high-level strategic initiatives and not enough on individual behaviours

Furthermore, it is best to draw the organisational structure in pencil so that it is never formalised and/or regarded as permanent. Realise that good organisations are like living bodies that change to meet the challenges. As Peter Townsend stated in "Up the Organisation"

"...A chart demoralises people..."

as quoted by Helen Trinca, 2001a

In fact,

"...we tend to meet any new situation by reorganising; and a wonderful method it can be for creating the illusion of progress while producing confusion, inefficiency and demoralisation" and for destroying the informal networks within an organisation..."

Gaius Petronius AD 66 as quoted by AIM, 2002


"...some people believe that formal authority still offers a magic potion. A position of power may amplify your voice but formal authority may also trick you into thinking you have influence that you don't actually hold..... in the new networked economy, open access to information and the freedom of choice it offers means that authority no longer exists. Hierarchies had to control the flow of information, resources and rewards to maintain the illusion of authority. That control erodes daily.......Holding a false sense of authority (I'm the boss) is dangerous. It shrinks your perspective, shortens your time frame, and decreases your curiosity..."

Annette Simmons, 2002

Not appreciating that organisational power/authority has limitations It needs to be seen as legitimate, ie involves rules and regulations that foster fairness (includes people having a voice, inclusiveness & being treated equally), predictability & transparency.

Not appreciating that a great deal of human behaviour is an extraordinarily complex process, ie

" is the product of many different factors - instinctive, physiological, rational and emotional - and protection becomes impossible..."

Robert Winston, 2003


"...We are dealing with people......we are not dealing with creatures of logic. We are dealing with creatures of emotion, creatures bristling with prejudice and motivated by pride and vanity..."

Dale Carnegie, 2003

Furthermore, unpredictability of behaviour, or randomness, is part of human make-up

" an intrinsic part of our neural make-up..."

Robert Winston, 2003

It is claimed that unpredictability of behaviour or randomness is linked with survival times when our forebears in prehistoric times were being attacked/chased by a predator, ie doing some thing unpredictable increased the chance of survival

Not realising that change is a personal journey andneeds to be understood at the individual level, ie organisations do not change unless the people in the organisation change.

Generally change programs are more acceptable to senior management, and less acceptable to implementers below senior management. This can be partially explained by peer group pressure and recognition, ie it is not in the group's interest to accept the change process.

Incorrect handling of resistors, such as wasting too much time with them and hoping that they will get "buy-in". Consequently, management does not take the productive path of maximising time with staff who are on-side in the change process

Not realizing that getting someone to admit that he/she is wrong is a losing battle because it conflicts with egos. Remember:

"...Let your listener's ego sleep. Concentrating instead on providing a visceral experience of a new story with new choices makes more sense. Don't back someone into a corner. Don't preach down at them. Let them sit back and enjoy your story. Lead the conscious and subconscious minds on a tour of a different point of view. Awaken their senses and emotions. Intrigue and activate the imagination. Use sounds, music, pictures, imagery, humour, dialogue, tactile elements, whatever makes it real for them, to engage them in co-creating a story that touches both their conscious and subconscious minds..."


"...the firmer you believe that you are right, the more susceptible you are to labeling those who disagree with you as wrong. People don't respond well to someone who believes that they are wrong.......Only when you acknowledge the honorable aspects of the other side do you have a snowball's chance of influencing them..."


"...our culture celebrates grand triumphs to the point where peaceful solutions are frequently viewed as weak or, worse, as giving in. The problem is rooted in our culture's adversarial model of influence as power...", ie them versus us

Annette Simmons, 2002

Not persevering enough, ie giving in too easily. Managingthis requires the support of people who believe in you, especially at the most trying moments

Not realising that communication is a continuous process and not a single event. In all communications, the message about the change process should be included, eg

- in routine discussions about a business problem, the proposed solutions are discussed as to how they fit into the new direction;

- during regular performance appraisals, employees' activities, behaviours, etc are discussed in relation to the new direction;

- when reviewing business performance, in addition to discussing the numbers, the behaviour of individuals is discussed in ways contributing to the transformation

But most senior management members communicate poorly by

- holding a single meeting to communicate the new direction

- making speeches to selected employee groups

- behaving in ways that do not reflect the new direction

Remember: change is only possible with the help of staff and they need to be communicated to so that they understand what the change is all about. Without credible communications that capture their hearts and minds, staff will not make the necessary sacrifices, even if they are unhappy with the status quo.

Sometimes short-term sacrifices in the change process will include job losses. Because it is hard to gain support and understanding when downsizing is part of the future, any statement about the future should include new growth possibilities and a commitment to treating everyone fairly, including those who are losing their jobs

(source: John Kotter, 2007)

7. Not Understanding the Need for a Holistic and Multi-disciplinary Approach (including the Integration and Impact of Psychology and Neuroscience)

In the industrial age, business systems were designed for it; in the information age, the brain is pivotal.

"...the human brain...... evolve for one purpose and one purpose only: to allow our ancestors to survive on the African savannah millions of years ago. Over the millennia, the brain got very good at its task, keeping our ancestors fed and out of the clutches of saber-tooth tigers and their ilk. Yet despite its humble origins, the same brain can understand general relativity, proper course of distant galaxies and comprehend the working of our very cells..."

James Trevil, 2015

Our characters are a product of many complex factors, ie genetic, development & experiential.

A mind is a delicate balance of maintaining

"...cascades of neuromodulators and neurotransmitters, each of which is regulated by others, focusing attention, damping urges, stroking desires, calming and stimulating..."

Recently a more accurate and nuanced view of human nature and behavioural change has resulted from the integration of psychology (the study of the human mind and human behaviour) and neuroscience (the study of the anatomy and physiology of the brain).

At the same time

"...the more we know about the brain, the more we realise we don't understand. Were still scratching the surface..."

Henry Marsh, 2014

"... imaging technologies such as functional magnetic resonance imaging (fMRI) and positron emission tomography (PET), along with brain wave analysis technologies such as quantitative electroencephalography (QEEG), have revealed hitherto unseen neural connections in the living human brain. Advanced computer analysis of these connections has helped researchers develop the increasing body of theoretical work......brain (the physical organ) with the mind (the human consciousness that thinks, feels, acts, and perceives)..."

David Rock et al, 2006

Neuroscience explains the network of causation inside our brain. For example, a small generic difference like an allele (a mutant form of a normal gene) can put a brain into imbalance. Drugs can have a similar impact and sometimes there are anatomical defects.The brain is a spectacularly versatile & opportunistic finder of new pathways if given half a chance.

Types of people who do not want science investigating our most "cherished verities" (brain) include

- religious conservatives who see it as a threat to their religious beliefs

- liberal legal scholars & philosophers who fear the unweaving of our civilization fabric or mystic

- post-modernists who focus on the concept of scientific evidence as a quaint relic of a more innocent past

- many schools of 'social science' whose ideologies are threatened by the science of neuroscience

- journalists wanting eye-catching headline opportunities

Changing behaviour of people is hard, even for individuals when the new behaviours can mean the difference between life and death. For example, of the patients who have undergone coronary bypass surgery, only 1 in 9 adopt healthier daily habits, such as regular exercise, losing excess weight, etc..

Neuroscience helps explain how the brain works, We have a choice of working with the brain or against it. The most effective is to work brain friendly (see volume 2 for more detail)

Exercise - our bodies are built for walking up to 20 km per day, ie designed for mobility, not sitting at desk behind a computer. Also, it clears the brain & reduce anxiety by increasing serotonin & dopamine (calming neurotransmitters)

Human behaviour in the workplace does not work the way most executives think it does. This helps explain why many organisational change initiatives are not very effective.

Organisational change needs to take into account the physiological nature of the brain and the way it reacts to change. For example,

- change causes pain as it provokes the sensation of psychological discomfort and this is similar to feeling physical pain. There is a link between social connection and physical discomfort within the brain. The human brain is a social organ.

"... its physiological and neurological reactions are linked directly and profoundly shaped by social interaction..."

David Rock, 2009

This is the reason people resist change even when it is in their interest.

"...Working memory - the brain's "holding area", where perceptions and ideas can be compared to other information - is frequently engaged when people can do something new...... it's your working memory that takes in the new information and matches it against the old. This kind of memory activates the pre frontal cortex, an energy intense part of the brain. The basal ganglia, on the other hand, are invoked by routine, familiar activities......this part of the brain, located near the core, is where neural circuits of long-standing habit are formed and held. It requires less energy to function than working memory does, in part because it seamlessly links simple behaviour from brain modules that have already been shaped by extensive training and experience. The basal ganglia can function exceedingly well without conscious thought in any routine activity. In contrast, working memory fatigues easily and can hold only a limited amount of information "online" at any one time..."

David Rock et al, 2006

Once an activity becomes routine, it is pushed from the pre frontal cortex to the basal ganglia which operates like an automatic transmission, shifting amongst patterns of deeply-held thought.

An example of the automatic preference of the brain is that in music we prefer known melodies, ie

" ...At least 90% of the time we spend listening to music, we are seeking out songs we're heard before.  That's because familiar songs are easier to process, and the less effort needed to think through something - whether a song, a painting, or an idea - the more we tend to like it. In psychology, this idea is known as fluency..."
David Huron as quoted by Derek Thompson, 2014/5

Those facing stressful types of experiences, like organisational change, need to change hardwired routines and this needs much energy and attention. As a result, people feel uncomfortable.

Furthermore, the brain has a strong capacity to perceive differences between expectations and actuality; sometimes called errors. These errors cause intense bursts of neural firing. These error signals are generated from the orbital frontal cortex of the brain which is located above the eye balls. This part of the cortex is connected the brain's fear circuitry (amygdala), which is the source of the "fight or flight" response. The activation of the amygdala and orbital frontal cortex draws metabolic energy away from the pre frontal region (the region that promotes and supports high intellectual functions) and animal instincts take over; people become more emotional and act impulsively.

Based on the above, the changing causes discomfort as the brain sends powerful messages that something is wrong and the capacity for sophisticated thought is decreased.

- change efforts based on incentives and threats are not very effective. There is clinical research and workplace observations that demonstrate that typical incentives and/or threats (carrot and/or stick) are not effective in the long-term. Yet they are the most popular approach in many organisations. This approach has been called behaviourism.

- change that that focuses on connectedness and persuasion get poor results. This approach works on empathy, ie

"...listen to people's problems, attempt to understand them on their own terms, and allow a holistic solution to emerge..."

David Rock et al, 2006

This encourages emphasis on persuasion, ie get people on-side by establishing trust and rapport so that they are convinced of the value of changing.

On the other hand,

"...the human brain......tell it what to do and it automatically pushes back. Partly this phenomenon is a function of homeostasis (the natural movement of any organism toward equilibrium and away from change), but it also reflects the fact that brains are pattern-making organs with an innate desire to create novel connections. When people solve a problem themselves, the brain releases a rush of neurotransmitters like adrenaline..."

David Rock et al, 2006

Thus it is more important to ask pertinent questions and support staff to work out their own solutions.

Furthermore, the brain structure predisposes people to being socially orientated, with people detecting differences between authentic inquiry and an effort to persuade them.

On the other hand, some ways to get people on-side include

- focus (the act of paying attention creates chemical and physical changes in the brain), ie

"...neurons communicate with each other through a type of electrochemical signaling that is driven by the movements of ions such as sodium, potassium and calcium. These ions travel through channels within the brain that are, at the narrowest point, only a little more than a single ion wide. This means that the brain is a quantum environment, and is therefore subject to all the laws of quantum mechanics..."

David Rock et al, 2006

Using the concept of Quantum mechanics, the mental act of focusing attention stabilizes the associated brain circuits, ie

"...concentrating attention on your mental experience, whether a thought, an insight, a picture in your mind's eye, or a fear, maintains the brain states arising in association with that experience. Over time, paying enough attention to any specific brain connection keeps the relevant circuitry open and dynamically alive. These circuits can then eventually become not just chemical links but stable, physical changes in the brain structure..."

David Rock et al, 2006

Attention continually reshapes the patterns of our brain, ie

"...people who practice a specialty everyday literally think differently, through different sets of connections, and the people who don't practice the specialty......have logical differences that prevent them seeing the world in the same way..."

David Rock et al, 2006

- perceptions are important. People's preconceptions have a significant impact on what they perceive. Expectations shape reality. People's mental maps, their theories, expectations and attitudes are important in creating human perceptions. This has been described as the placebo effect. For example, the mental expectation of pain relief accounts for change in pain perception, ie a decrease in the sensation of pain. People experience what they expect to experience. Furthermore, it highlights the importance of creating moments of insight, ie

"... large-scale behaviour change requires large-scale change in mental maps. This in turn requires some kind of event or experience that allows people to provoke themselves...... to change their attitudes and expectations more quickly and dramatically than they normally would..."

David Rock, et al, 2006

Using fMRI and EEG technologies to study moments of insight has found bursts of gamma waves (high frequency 40 Hz oscillations) in the brain just before moments of insight. These oscillations are productive to creating links across parts of the brain. Thus at the moment of insight, a complex set of new connections is being created. Furthermore, to hardwire an insight we need to pay it repeated attention. These connections have the potential to help the brain overcome its resistance to change. This stresses the importance of people owning a change initiative for it to be successful. In other words, to help people change we need to encourage learning around recognizing and deepening people's insights.

Need to relax the brain to increase the chance of an insight, ie had the important break-through ideas when having a "quiet drink". Two examples are of a relaxed mind include John Nash (Nobel laurent in Economics around game theory - see file entitled "A Brilliant Mind")  and John Turing (broke the Nazi code including the unbreakable "enigma" code - see film "Imitation Game") (Wikipedia, 2015a & b) .
 There is some thought that insights are linked with boredom; the latter involves mental cleansing of the brain which could lay the foundation for creativity and reflection. Maybe boredom is not a lack of purpose but an absence of distraction!!! The current habit of "being on" 24/7 and a collective digital obsession means that swiping, texting, connecting, etc have replaced daydreaming and mind-wandering.

- attention density shapes identity. Repeated, purposeful and focused attention can lead to long-lasting personal charge.

"...for insights to be useful, they need to be generated from within, not given to individuals as conclusions..."

David Rock et al, 2006

The reasons for this are

i) only by going through the process of making connections themselves will people experience the adrenaline-like rush of insight. The moment of insight is a positive and energizing experience. This rush of energy helps facilitate change and fights against responses like fear.

ii) neural networks are influenced by genes, experiences and varying patterns of attention. Remember: human brains are very complex and each of us has a unique brain architecture.

Attention density refers to the amount of attention paid to a particular mental experience over a specific time. The greater concentration on a specific idea/experience, the higher the attention density. Attention density causes your brain circuitry to be developed and stabilized.

"...with enough attention density, individual thoughts and acts of the mind can become an intrinsic part of an individual's identity: who one is, how one perceives the world, and how one's brain works. The neuroscientist's term for this is self-directed neuroplasticity..."

David Rock et al, 2006

"...with an attention model, learning becomes possible for many media, not just in a classroom. Also, given the small capacity of working memory, many small bites of learning, digested over time, may be more efficient than large blocks of time spent in workshops. The key is getting people to pay sufficient attention to new ideas..."

David Rock et al, 2006

"...any behaviourial primarily a function of their ability to induce others to focus their attention on specific ideas, closely enough, often enough, and prolonged enough over time..."

David Rock et al, 2006

In summary,

It's best to schedule your activities around how the brain functions, rather than topic. This can be done by

- prioritising so that energy-demanding tasks are done first
- working chunks/blocks as the brain tires like a muscle
- make tasks more routine
- simplifying information to key elements
- using alternative ways of thinking and working like drawing, reading, listening, etc
- clearing the mind before working on a difficult task
- not allowing inhibiting/distracting impulses to become actions
- achieving optimal level of stress, arousal, alertness, interest, etc to attain peak performance
- priming (subconsciously remembering words, concepts, etc ,that influence actions

The brain is very plastic so that neural connections can be reformed, new behaviours learned and entrenched behaviours modified at any age, ie the ability of the brain to re-organise itself by forming new connections, something that continues throughout life. You can teach "an old dog new tricks", if you engage the brain in positive attention, ie mindfulness allows reflection and observation things so that self-observation can occur.

In Australia the digital brain health market is worth $1 b+ and is expected to increase to $ 6 b. by 2020 (Helen Hawkes, 2014a)
Staying mentally alert ranks higher than social security and physical health as a top concern of adults who are 50+ years old
Organisations will increasingly use digital tools to enhance mental performance and wellness in staff, addressing the causes of productivity losses, etc. Even small improvements in cognitive functions like memory, mental flexibility, attention, knowledge, conversation recall, mental arithmetic, systematic thinking, adaptive problem-solving, etc can have potentially significant impacts.
Importance of getting people's undivided attention as the area of the brain (prefrontal cortex) that is dedicated to learning, comprehension, decision-making, understanding consequence of action, sense of perspective, etc requires concentration and effort to process new information. The new information is creating new neural connections that needs re-enforcing to ingrain them in the brain structure. This can create "moments of insight" which allows people to change their attitudes and expectations, ie

"... people who focus on specific tasks can literally teach themselves to think differently over time..."

David Rock, 2007

Furthermore, people's expectations and attitudes play a central role in their perceptions.

Remember that most people have the mental capacity to focus on only one idea at a time.

Importance of thinking before reacting. This is linked with the concept of "a quiet mind" so that the prefrontal cortex (working memory linked with rational thought) overrides the amygdala (immediate response linked with the brain's fear circuitry). Generally the pre-frontal cortex activity is impaired under conditions of stress, fear and anxiety, ie noisy mind

The studies of the brain (mind) experiences in the workplace, etc suggest that the brain (mind) is more a social system than previously thought

How can people's behaviour change

"...start by leaving problem behaviours in the past; focus on identifying and creating new behaviours. Over time, these may shape the dominant pathways in the brain. This is achieved through solution-focused questioning approach that facilitates self-insight, rather than through advice-giving..."

David Rock et al, 2006

Need to reinforce behaviour that works and to give positive feedback. As the brain is constantly pruning connections while making new ones, reinforcing behaviour and positive feedback will preserve, rather than prune, neural connections.

Need to focus people on solutions and developing insights, rather than just problems

Economic modelling is based on an incorrect assumption that people will change their behaviour if they have sufficient financial incentives. Recently it has been demonstrated that these financial incentives are only effective when people perceive them as supporting their social needs.

" great advantage of neuroscience is that it provides hard data to vouch for the efficacy and value of...... soft skills..."

David Rock, 2009

Mild social pressure can result in people not doing things that they as individuals would find normally unacceptable, ie helping somebody in need. To teach something new, you have to surprise them, ie make it personal, as just a statistical fact will not be enough, ie

"...There is a deep gap between our thinking about statistics and our thinking about individual cases. Statistical results with a causal interpretation have a stronger effect on our thinking than non-causal information. But even compelling causal statistics will not the change long-held beliefs or beliefs rooted in personal experience......surprising individual cases have a powerful impact and are a more effective tool for teaching......because the incongruity must be resolved and embedded in a casual are more likely to learn something by finding surprises in your own behaviour than by hearing a surprising fact that people in general..."

Daniel Kahneman 2012

Touch (an important human sense)

· Touch is one of the main human senses, along with hearing, taste, vision and smell

"...In factories and warehouses, robots routinely outdo humans in strength and precision. Artificial intelligence software can drive cars, beat grandmasters at chess and leave Jeopardy! Champions in their dust.

But machines still lack a critical element will keep them from eclipsing most human capabilities any time soon: a well-developed sense of touch..."

John Markoff, 2014

"...Touch is a much more complicated sense than one might think. Humans have an array of organs that allow them to sense pressure, sheer force, temperature and vibrations with remarkable precision..."

Ken Goldberg as quoted in John Markoff, 2014

· Haptics = technology that makes it possible to mimic the sensation of touch in a computer simulation. It is a way of linking artificial intelligence and human intelligence so that each performs what it is best at

Kinematics = the study of motion control in jointed bodies

· Since the 1960s, robots have learned to perform repetitive factory work but are limited in activities like opening a door, picking themselves up if they fall, pulling a coin out of a pocket or twirling a pencil. Robots have a level of physical ineptness, and lacked perception and mobility

"...Physiologists have shown that the interaction between a finger on a surface is detected by organs called mecnano-receptors, which are embedded at different depths in the skin. Some are sensitive to changes in an object's size or shape and others to vibrations. In the case of tiny surface variations, cues come from the Pacinian corpuscles, oval-shaped structures around 1 mm long......Replicating that sensitivity is the goal of haptics, a science that is playing an increasing role in connecting the computing world to humans..."

John Markoff, 2014

8. Not Understanding The Importance of Timing

Not appreciating the importance of timing, ie psychological readiness. For example, if issues are raised before the organisation is ready to address them, an opportunity is created for both the issue and the person who raised it to be sidelined.

"...You need to wait until the issue is ripe, or ripen it yourself ..."

Ronald A Heifetz et al, 2002

Generally, patience is not a strong point of people who are passionate about what they are doing. On the other hand, holding off until the issue is ready may be critical in mobilising people's energy and getting yourself heard!!!!!

Many organisations have a whole spectrum of challenges confronting them at any given time. Generally, urgency and/or availability of resources will dictate priorities. However, psychological readiness is important, ie

"...has the psychological readiness spread across other factions in the provide a critical mass? An issue becomes ripe when there is widespread urgency to deal with it...... it is a matter of perspective.....what determines when, or whether, an issue becomes ripe? How does it take on a generalized urgency shared by not just one but many factions......although there are many factors, we have identified four key questions: what other concerns occupy the people who need to be engaged? How deeply are people affected by the problem? How much do people need to learn? And what are the senior authority figures saying about the issue..."

Ronald A Heifetz et al, 2002

Four questions about psychological readiness

i) What other concerns occupy the people who need to be engaged? Or what else is on the people's minds? If there is a current crisis, it will be difficult to get attention shifted to the issue that you think is important. Sometimes you can get a hearing by postponing your issue to a later date. Sometimes you need to watch for the best opportunity. However, if you notice that there is never a time for your issue, you may have to create the opportunity by developing strategies for generating urgency

ii) How deeply are people affected by the problem?

Unless people feel the need for it, they will not support it. Sometimes, fortuitous events ripen an issue by heightening the severity of the problem. Used properly, a crisis may provide a suitable opportunity

iii) How much do most people need to learn in order to make informed judgments?

"...the lack of knowledge on an issue is almost always in direct proportion to its lack of ripeness. A crisis can change quickly......because crises and tragedies generate the urgency to tackle issues, sometimes the only way to bring focus on an issue and move forward is to create a crisis......if you do not take into consideration how difficult the learning will be, the organisation or community will box you off as an outcast, impractical visionary, or worse. You may have to take baby steps. It may take years to ripen the issue in an organisation to the point that people understand what is at stake and can decide..."

Ronald A Heifetz et al, 2002

iv) What are people in authority saying and doing?

Their commitment is essential but not critical. In other words,

"...formal authority confers license and leverage to direct people's attention......the less ready a group is to resolve an issue, the more it may need to challenge authority.......People expect their authorities to persuade people to do what they should do. Furthermore, society has formal rules and procedures for authorities to take charge. The person running the meeting today has an agenda......if you are a person in authority, you are not only expected to set the agenda, but also to select the issues that warrant attention. You cannot keep your authority in an organisation if you insist on projects that your organisation opposes. In other words, those who have authority put it at risk by seeking to raise unripened issues"For people exercising leadership without or beyond their authority, ripening an issue becomes more difficult, requiring more dramatic and therefore risker steps..."

Ronald A Heifetz et al, 2002

Need to understand mindsets (yours and others), ie the way we see the world. Facts do not change but people's perceptions of them do, as they see them through their own mindsets and these perceptions become reality for them.


"...perceptions vary for a number of reasons: background; culture; values; or personal experience..."

Edward deBono, 2004

"...none of us actually see reality. A woman sees a different reality to a man. A Hispanic sees a different reality to an Australian. Our perception is a construction. We are not a camera, taking accurate pictures of the world. Most of us live our lives as naive realists - we think that what we see actually is..."

Peter Senge as quoted by Mike Hanley, 2005

"...When someone does something you do not like or with which you do not agree, it is easy to label that person as stupid, ignorant, malevolent. But that person may be acting 'logically' within his or her 'logic bubble'. The bubble is made up of perceptions, values, needs and experiences of that person. If you make a real effort to see inside that bubble and to see where the person is 'coming from', you usually see the logic of that person's position..."

Edward deBono, 2004

9. Not Understanding the Balance between Intuitive and Analytical Approaches

Not understanding how to evaluate research findings and the scientific process; the latter involves:

"...i) a statement of the purpose of the study and how it fits into the body of knowledge of that scientific field

ii) how the study was conducted: there must be enough detail for the study to be replicated by others if they so choose

iii) what the study discovered, including all results that have a bearing on the purpose, not just those that fit its hypothesis

iv) what the authors think the results mean..."

Tony Eggleton, 2013

For publication, a peer review is conducted by at least 2 experts in the field who are not known as colleagues to the author(s)

Also, the experiment must have the appropriate "control" activity/group for authentic comparison.

Many decisions are not based on logic. They are irrational as they are motivated by unconscious biases, prejudices and bogus assumptions. Thus we need to achieve a balance between conscience, emotion, intuition and analytical tools in decision-making. Surveys revealed

"...45% of corporate executives now rely more on instinct than on facts and figures in running their businesses..."

Eric Bonabeau, 2003

"...Purely fact based decisions are relatively unusual. Emotion......plays a far greater positive role than previously thought..."

Baba Shiv as quoted by Catherine Fox, 2007

"...Our emotional hearts are in constant battle with our rational minds. We buy on emotions. And then we post-rationalise the decision, to make ourselves right. In other words, we connect to something with our hearts, we wanted and, often, we buy..."

Anders Sorman-Nilsson, 2013

A way of exploring this is to consider digital versus analogue. Our rational minds have gone digital (fast and convenient) but our emotional hearts have remained analogue (deep and meaningful), ie

"...Analogue wins hearts. They speak the same language. Digital may rationally be the way to go, that analogue stays in the fight. Digital may democratise, but the analogue to intrigues. Digital is fast, analogue is slow. Digital gives you a snapshot preview, analogue is the film. Digital enables instant access, analogue requires physical effort..."

Anders Sorman-Nilsson, 2013

An example is Christmas time. Buying the food, presents, etc can be done "digitally", ie convenient and fast. By contrast, cooking and eating is often done "analogue": it is about enjoyment, connection, sharing, caring, slow vibes, personal conversations, savouring, lingering, siestas, etc

Intuition, conscience and rigorous analysis each need to play a role in decision-making. If there is an imbalance between the 3, then disaster can occur. On the other hand, an increasing supply of data and less time to make decisions make it more difficult to find the correct balance, ie how do you analyse more in less time?

Furthermore, it is claimed that intuition is at the center of the decision-making process and analysis is, at best, a supporting tool for making intuitive decisions

Intuition can be defined as anything from innate instinct to professional judgment to plain-old common sense. A more general definition includes

"...the brain's process of interpreting and reaching conclusions about phenomenon without resorting to conscious thought..."

Eric Bonabeau, 2003

Because we general make decisions based on incomplete information, intuition is important.. Furthermore, it has been shown too much data and choice can cause confusion and will not necessarily result in the right decision. When the brain considers lots of information, it slows down. Remember:

"...knowing what information to ignore is the trick of good intuition"those who rely on instinct will outperform those who complicate decision-making..."

Gerd Gigerenzer as quoted by Brad Hatch, 2008b

Unfortunately our thinking is subject to many influences and biases. Most of these operate at subconscious levels. We prefer information that supports our assumptions and prejudices, while dismissing information that questions them.

Many times we are irrationally influenced by the first impressions we receive on a particular subject. This becomes an anchor that determines and perhaps distorts how we process all subsequent data.

One of the most dangerous areas of intuition is our deep-seated need to see patterns. This pattern recognition is the way that the brain assembles information from the past and uses it to understand the present and anticipate the future. It has been demonstrated that this desire to identify patterns is so strong that we routinely perceive them where they do not exist. When confronted with a new phenomenon, our brain tries to categorize it based on previous experiences, ie to fit it into patterns stored in our memories. Consequently, we filter out the new and recycle the reactions from the past. This is a carry-over from our days of living in caves, when in a life threatening situation it was wiser to flee than to stay and do some careful analysis of the situation. On the other hand, in complex, competitive situations, fine distinctions can be what separates success from failure. In fact, intuition is a means of not assessing complexity but of ignoring it. The more complex and/or chaotic the situation, the more misleading intuition becomes. Furthermore, intuition results in focusing thinking too quickly. It does not encourage sustained exploration of alternatives and can result in encouraging "group think"

On the other hand, intuition has been described as more than

"...emotional reactions, gut feelings - thoughts and impressions that don't seem entirely rational......but I think what goes on in the first two seconds is perfectly rational. It is thinking - but it is just thinking that moves a little faster and operates a little more mysteriously than the kind of deliberate, conscious decision making that we associate with thinking..."

Malcolm Gladwell as quoted by Luke Collins, 2005b

This thinking style has been called "thin slicing"


"...thin slicing is not random, regardless of appearances.......The brain is continually processing information......a mind that passes judgments unconsciously. It's a system in which our brain reaches conclusions without immediately telling us that it is reaching conclusions. We live in a society dedicated to the idea that we're always better off gathering as much information and spending as much time as possible in deliberation. As children, this lesson is drummed into us again and again: haste makes waste, look before you leap, stop and think......there are lots of situations - in times of high pressure and stress - when haste does not make waste, when our snap judgments and first impressions offer a much better means of making sense of the world..."

Malcolm Gladwell as quoted by Luke Collins, 2005b

Underestimating the importance of "gut feeling" or intuition.

"...Intuition is not some paranormal ability to see the future, but that technique of learning what to look for in a given environment, and of doing so without a conscious brain getting in the way......intuition - the ability to direct a behaviour according to some unconscious cues..."

Robert Winston, 2003

Peter Senge et al (2005) claim that researchers have identified 3 major neural networks in the body: the largest is the brain; the other 2 are the intestinal tract and the cardial sack. Thus the neuronal networks in the intestinal tract provide a physiological basis for "gut feeling": it is more than just a metaphor. Furthermore, gut feeling or intuition is your experience talking.

10. Need to Focus More on Symptoms than Causes

Not focusing attention on the issue

"...getting people to focus their attention on tough problems can be a complicated and difficult task, particularly in large organisations..... where, typically, ways of avoiding painful issues - work avoidance mechanisms - have developed over many years. The most obvious example of work avoidance is denial. Even our language is full of shorthand reminders of this mechanism: "out of sight, out of mind; sweep under the carpet; if it ain't broke, don't fix it". Other typical work avoidance mechanisms are scapegoating, reorganizing (yet again), passing the buck (setting up another committee), finding an external enemy, blaming authority, and character assassination.......These mechanisms reduce the level of distress in an organisation or community but deflect attention from the tough issues and shift responsibility away from the people who need to change.......If you employ a routine mechanism for getting attention, people might well see the problem as routine and ignore it. So even with authority, you may need to find creative ways to signal that the new situation is different......if you are not in a position of authority, drawing attention entails risks as well as great challenges. You may form alliances with people who have more authority and can direct attention to the issues you get attention of higher ups, chances are you will need to escalate your behaviour or rhetoric to a level that creates some personal risk......getting a group too focused on tough issue from a position without authority is always risky business. But you can lower the danger by speaking in as neutral a way as possible, simply reporting observable and shared data rather than making more provocative interpretations. It may be more than enough simply to ask a straightforward question in order to bring the underlying issue to the surface. When you are operating beyond your authority, you tread a thin line between acting out of role such that people will notice, and being so extreme that your issue (and perhaps you) will be dismissed..."

Ronald A. Heifetz et al, 2002

Trying to find solutions to treat symptoms rather than the fundamental causes

"...think of an intractable problem within your organisation. Chances are it is caused by factors that are fundamental to the way the organisation is structured, the way people think about their roles, and the way the organisation relates to the environment around it. Now think of the various ways you have tried to solve that problem. It is possible that the 'solution' will have treated the symptoms rather than the fundamental causes. Like the headache we treat with aspirin rather than searching for the cause, companies often shift the burden because the real change is wrenchingly difficult"the first that you see these patterns of interdependence.......The second step is recognizing that the organisation has become kind of resigned to that pattern, and, importantly, recognizing that 'we' - including me - are all part of the problem. Recognizing that everyone has to change is difficult, particularly in the corporate environment where people have a lot at stake..."

Peter Senge as quoted by Mike Hanley, 2005

With all scandals, like financial institutions causing the GFC and subsequent failures of the financial system eg Barclays abuse of the LIPOR, Enron's fraudulent behaviour, Bernie Mandoff's pyramid scheme, etc. With these examples plus many suggestions of how to solve things, ie corporate governance, Sarbanes-Oxley and fiduciary duties, etc, we are missing the basic point. They address the symptoms and not the causes.

11. Measurement Perceptions

The biological world (with nature's growth dynamics) teaches that sustaining change requires understanding the reinforcing growth processes and what is needed to catalyse them, and addressing the limits that keep change from occurring. Nothing in nature grows in the absence of limiting factors and there is a need to understand the interplay between growth processes and limiting processes. Nothing can change in a self-sustaining way unless there are reinforcing processes underpinning the change.

There are at least 3 fundamental reinforcing processes that sustain profound organisational change by building upon each other:

- enhancing personal results

- developing networks of committed people

- improving business results

A lack of understanding of the limiting processes that could slow or arrest change. The ingrained habit of attacking symptoms and ignoring deeper, systematic causes of problems means there is a need to learn why the

"...harder you push, the harder the system pushes back..."

Peter Senge et al, 1999

Not understanding "compensating feedback". This occurs when people attempting to produce change do not see the balancing processes that are conserving the status quo. When they encounter difficulties, they naturally work to overcome them, but the harder they push, the harder the system pushes back. Instead of destroying the past merely because it is the past, it is important during organisational transitions to build on the past by conserving that which is still desirable.

Over-emphasising conventional measurement systems. We are conditioned to see a mechanical world - a world of measures, plans and programs, a world of people "in control" and leaders who "drive" change. Yet nature doesn't measure; it deals with patterns that connect, ie there is no objective standard for how high a tree should grow, or how fast an animal should run. As we became very good at measurement, we reaped the results in technological progress: steam internal combustion, high rises, etc, and more recently measurement has come to human organisations. This practice of measurement leads, over time, to reductionist thinking and mechanistic activity. Measurement has become a tool for fragmenting our understanding, and assessing, one process, or one person, as better than another on some objective scale. This results in destroying nature and the natural sensibility, ie the rhythms, limits and patterns of the natural world are replaced by the rhythms and patterns of clocks, computers, transit schedules, thermostats, etc. On the other hand, nature has no end: it builds, continually, upon the interplay of the means of evolution and biology.

As Edward Deming stated

"...97% of what matters in an organisation cannot be measured..the result of conventional measurement is manipulation without genuine understanding..."

as quoted by Thomas Johnson, 1999

Even though measurement is an indispensable part of management,

" can easily become elevated to a sweeping generalisation about reality. When this happens, people start to believe that something is real only to the extent that it's measurable. Managers know this assumption as the familiar dictum "you can't manage what you can't measure" or "people pay attention only to what gets measured". Not only does over-reliance on measurement.. modern society is continuing to see the world of things rather than relationships, it also gives rise to the familiar dichotomy of the hard stuff (what can be measured) versus the soft stuff (what can't be measured)"it's easy to relegate the soft stuff, such as the quality of interpersonal relationships and people's sense of purpose in their work, to a secondary status......the soft stuff is often the hardest to do well and the primary determinant of success or not measurement per se. The problem is the loss of balance between valuing what can be measured and what cannot, and becoming so dependent on quantitative measurement that they displace judgments and learning. When this happens..driving organisations to achieve quantitative goals set at the top, with little serious effort to build new capacities to achieve sustainable levels of improved is not possible to measure a relationship......the fundamental insight of 20th century physics and yet to penetrate the social world: relationships are more fundamental than things..."

Peter Senge et al, 2005

Short-term performance requirements (usually financial) for both public and private organisations can "de-rail" the long-term strategies required for effective change.

A misperception that growth and change are linked positively

Management claims that they have all the answers

Not identifying and removing limiting factors and obstacles (including staff)to the change process.

Not identifying and rewarding short-term gains made in change

Concentrating on the tangibles like procedures, job descriptions and organisational charts, and ignoring the intangibles like the emotional journey (winning the hearts and minds).

Not achieving the appropriate balance between "hard" and 'soft' options/approaches. The hard approach involves heavy use of economic incentives, drastic layoffs, downsizing, and restructuring, while the soft approach is geared toward building up the corporate culture and human capability through individual and organisational learning - the process of changing, obtaining feedback, reflecting, and making further changes. It is important to get the balance right. Too much of the hard approach involves "cutting the organisation to the bone", with a consequent loss of expertise, and exacerbates any distrust of management by the workers. Too much of the 'soft' approach makes it hard to make the necessary decisions about fundamental structural changes

Not achieving the appropriate balance between present imperatives (leaner, faster and better production) and future needs (new products, new markets, new distribution avenues, etc.)

Sometimes conventional measurements that stress short-term goals represent a 'trap' that can kill change and learning initiatives by requiring staff to report the results in a way that restricts future innovation. If, in the short-term, costs are higher, or customer complaints have increased, or productivity figures have fallen, senior management members often jump to premature conclusions that the organisation is performing poorly. This tends to lead to snap evaluations. Invariably there is "some pain before any gain", eg J-curve, Valley of despair, etc

Too much focus on financial measurement, recognition and rewards. An example of this is the focus on the gross national product (GNP). This is a number that measures economic/financial performance but

"...measures neither the health of our children, the quality of their education nor the joy of their play. It measures neither our wisdom nor our learning, neither our wit nor our courage, neither our compassion nor our devotion to the country. It measures everything, in short, except that which makes life worth living..."

Bobby Kennedy as quoted by Michael Traill, 2009

Wrongly assuming that organisational transition is linear and rational, ie assume that people will rationally choose to adopt 'superior' innovation to replace outmoded systems and technologies

Some diagnostic clues that change involves more than technical solutions include

- people's hearts and minds need to change and not just their preferences or routine behaviours, ie people need to learn new ways and choose between what appear to be contradictory values

- process of exclusion, ie if you throw all the technical fixes you can imagine at a problem and the problem persists, the message is very clear that is more than a technical problem

- the persistence of conflict usually indicates that people have not yet made the adjustments required for the change process

- crisis is a good indicator as it represents danger as the stakes are high, time appears short, and the uncertainties are great. Crises also represent opportunities to galvanize attention on unresolved issues

Not realizing that follow-up or monitoring and evaluating systems are not the answer for continued co-operation. It is falsely assumed that they will fix non-compliance.

"...broken agreements and inaction are more likely to result from failed influence, not forgetfulness......forgetfulness is just another form of failed influence. True influence changes behaviours without relying on constant reminders. Any agreements that depend on policing future behaviour are not addressing some force or dynamic still working against your design goal..."

Annette Simmons, 2004

Not recognizing that sometimes it is better not to change as it is too costly financially and the negative impact on staff is too high

12. Not Understanding the Importance of Stories

Under-estimating the importance of stories - people inform one another not through numbers, but through stories, ie describing where a piece of work came from, what happened to it, and why it might not be "right". It takes years to build the mutual understanding necessary to tell, and listen to, the stories. People develop an innate feel for when the work is on track, ie the gut feeling. If someone reports feeling uncomfortable, that's a clear sign that something is wrong in the process. Managers need to measure to learn and not see numbers as an end in themselves. It is vital to change the attitude from

"who's going to see this"?


"what can we learn from this"?

Effective stories unite an idea with an emotion. You can weave a lot of information into the telling as well as arouse the listener's emotions and energy. At the same time, this is hard work as it demands vivid insight and storytelling skill. Stories are how we remember: we forget lists and bullet points. A good story involves the struggle between expectation and reality in all its nastiness, plus the storyteller having a good understanding of him/herself and of human nature, compassion and some skepticism.

Good storytelling is an important element of successful management. A good story will energize people, and provide the focus, inspiration and meaning that will encourage organisations to move forward. Part of a senior manager's job is to

"...tell and retell the story of what your business is capable of achieving: where it comes from, where it currently is and where it's going. More importantly, it's about enabling all people to understand the value of a contribution to the story..."

Martyn Newman, 2007

There are 3 important types of story for management to tell

i) your personal story - demonstrating that you are an authentic and genuine person by communicating your beliefs and values as the basis for you are; furthermore, you have "to walk the talk"

ii) the group or collective story - this is about developing a shared sense of destiny and collective identity, ie a sense of belonging to a group within which each individual understands his/her unique contribution and appreciates the contribution of others

iii) the destiny or dream story - this describes why the organisation must change, where it is going and how it will get there. This story must convince and energise others to be part of the future direction of the organisation

"...the real question for you as a leader is: do you possess sufficient independence to author a distinct story - or at least a chapter - in the life of your organisation or business unit? Does the story engage people and provide them with a relevant and potent dream? Can you do this for your customers and, more importantly, can you empower them to realize those dreams by buying into the vision, product or service that you are responsible for providing?..."

Martyn Newman, 2007

"...Stories are important

Stories are connected to your spirits - by telling your story you stay connected to the deepest parts of yourself

Stories have a quality of 'evocation' to them. They evoke a community response by creating a shared suspension of time and listening

Stories have a rhythm (like music) that creates a unison of people in a room and builds a shared sense of community through the unspoken rhythm

Stories help us stop separating our lives between 'logic' and 'emotion'. Stories blend all the different parts of ourselves and keep us whole

Stories keep us intact with our lives. They tell us when we are fragmented......and reclaim our wholeness

Stories are often about loss......They help us to prepare for those events in our lives

Stories, when really listened to, allow us to separate parts of ourselves and move forward in our life

Stories, by ritualising beginnings and endings, allow us to celebrate......

Stories help us leave things behind in a way things are still part of our lives and not forgotten"

Stories help us look at the perceptions of our lives. In telling comes"how we see ourselves

Stories are attached to our soul, and give us a way to symbolize what has happened to us......

Stories can create a shared 'what if'. They allow us to create a communal picture of the way things could be

Stories keep us connected to our spirit and help us to balance the giving and receiving

Stories keep us in touch with what we need and want from our work

Stories help to build a bridge between the storyteller and the listener; in a sense, telling a story and having people hold onto it helps the storyteller to move forward

A story can evoke powerful feelings in the listener......The feelings of a story stay with us for a long time

They say something about the way we see the truth; they are more than a logical sequence of events, they also say something very powerful about our feelings and how we see the world..."

David Pitonyak, 2005


"...Resistance always has a story. Understanding the unique story of resistance to your new idea enables you to successfully negotiate a new story that is more attractive than an old one......a strategy for successful influence requires that you understand the story that competes with your new ideas..."

Annette Simmons, 2002

13. Not Reading Social Signals (body language) Correctly

The social signs are the non-verbal cues like tone of voice, gestures, expressions, proximity to others (how much you face people that you are talking to, how close you stand to them, how much you let them talk, etc), etc. In communications, these are more significant than the words we use (see non-verbal signals in Volume 3)

This re-enforces the importance of face-to-face communications and its impact on productivity, ie

"...face time with colleagues is vital, as much as 2.5 times as important to success as additional access to information"we think we can increase productivity by 10% at no cost just by rearranging the environment to promote more employee interaction..."

Alex Pentland, 2010


"...the most successful people are more energetic. They talk more, but they also listen more. They spend more face-to-face time with others. They pick up cues from others, draw people out, and get them to be more outgoing. It's not just what they project that makes them charismatic; it's what they elicit. The more of these energetic, positive people you put on a team, the better the team's performance..."

Alex Pentland, 2010

As language was developed around 50,000 years ago, we have used communication signals for millennia. This helps explain why they are so powerful.

We are social creatures. Thus when communicating we look for signals, eg are they honest, are they enthusiastic, do they know what they are talking about, etc ?

14. Lack of.....

Lack of

- resources (time, money, labour and creative thinking techniques), ie shoestring model

- training to handle change

- communication, especially of the new vision

- consultation about the effects of the change

- trust between management and staff

- time (need to design efforts to get maximum results from least effort and cost)

15. Inappropriate Treatment of Change

Change management being treated like

- one-size fits all

- instant coffee

- magic wands

- silver bullets

- cure-all recipes

- magic potions

- management by latest best-seller

- one-night stand, etc

These concepts can result in the application of generic models that are not suitable to a specific organisation, ie selection of an inappropriate model, strategies and tools for the particular organisation and its particular stage of development. For example, it is futile to use techniques such as employee surveys, focus groups and 360 degree feedback to give people the chance to tell management what is wrong, without employees assuming any responsibility for improving matters, ie no buy-in. In these situations, these tools subtly reinforce the view that only management has to the power to fix the problems. Another miscalculation is applying the boom theory of change, ie different models of change are like "freight trains": roaring through organisations

There are increasing numbers of frameworks that claim to be the "perfect fit" for any organisations. There are 2 extremes to this, ie

i) Too specific - these frameworks developed from one, or a couple of, successful organisational change effort. Unfortunately they end up being too specific to a particular organisation at one time

ii) Too general - usually these are based on research into 100s of organisations across a range of cultures to develop a framework that fits everyone. Unfortunately most of these are too general and not specific enough for an individual organisation to find of use.

NB Any framework must be simple, relevant and intuitively understandable while not oversimplifying the complexity of the situation

Sense of urgency, ie do not appreciate the need to change and/or have survived many "near-death experiences" (see Ingredient 2)

Purpose not shared by participants in change

Not recognising that change is a continuous process that requires the "change behaviours and culture" to be anchored in the organisation's culture, such as the painting of Sydney Harbour Bridge (never stops). In other words, treating change management as an event and not as a continuous process

Treating change as a procedural matter rather than as a relearning process

Prematurely declaring victory and underestimating the resistance to change

Too little leadership and too much management, ie under-led and over-managed

Too much complacency which is evidenced by

- lack of leadership and commitment by senior managers

- paying lip service to change, ie using all the right words and phrases, etc

- piecemeal approach and not holistic

- lack of a powerful and guiding coalition to lead the change

- organisation is too successful (market share, profit, etc)

A "no-mistake" environment, ie failure is penalised and punished

"...1 plus 1 equals 4. One mistake, one time, equals for-ever..."

Robert Kriegel et al, 1996

Impact of defensive routines include

- "Learned helplessness" - an attitude adopted by people who feel that they cannot make a difference and that they do not have control over their environment. Staff members become dependent upon management to make all the decisions. As a result, staff do not take initiatives but wait for instructions. Management can encourage learned helplessness by having a "blame culture" and a "command and control" style of leadership.

- Blame culture - it is always somebody's fault and there is consequently a pervasive reluctance to try anything different or new as it might not work. Furthermore, the focus is on the risk that if it does not work, then you will be blamed for the failure, rather than focusing on the benefits of success from the new approach

- too many reasonable reasons/excuses, ie too many excuses not to do something!!!!!!

Organisations that do not learn from mistakes and prefer to blame culprits. Organisations need to encourage staff to face up to failures, refuse to take short cuts and refuse to simplify reality. Organisations need to learn 'to fail forward'

'set-up to fail'- an activity/group is organised but has no chance of success

Lack of willingness for open discussion of difficult, often painful and potentially threatening issues

Change fatigue - too many multiple change projects, eg nearly 2/3 of the Australian organisations surveyed had attempted 16 plus different change projects in the last 2 years. People in this situation speak of feeling disjointed, pushed and pulled from crisis to crisis, of never being allowed to concentrate on or to finish one task before being jerked away onto something new. This has been called

"...future shock " defined at its simplest as too much change in too short a period of time..."

Alvin Toffler as quoted by Helen Trinca, 2006

Too over-confident - over-confidence is generally defined in 1 of 3 ways

i) over-estimation of one's actual performance

ii) over-placement of one's performance relative to others

iii) over-precision, or excessive confidence in one's beliefs

"...Whatever beliefs they hold, people can tend to be too sure that these beliefs are the correct ones. The reason probably has to do with the way we access information from memory and the way the brain is setup..."

Don Moore as quoted by Catherine Fox, 2007h

There are a number of negative consequences of sufferers of over-confidence:

i) not good listeners

ii) do not appreciate and/or learn from feedback (especially negative)

iii) resistant to being corrected

iv) resistant to considering other options and other possibilities

v) unable to share ideas

vi) think that anyone who disagrees with them is incompetent or confused or idiots

vii) usually oversimplify situations

viii) have an egocentric focus that can feed on itself, ie those with the most successful strategies will gain confidence in their ability and this will make them surer of themselves and more confident of their decisions - leading to further overconfidence

ix) people will favour a leader who expresses the most confidence

x) over-confident decision makers tend to make more poorer decisions than others

Over-confident people need someone to act as devil's advocate, ie someone to propose a contrary opinion. However, this role can be particularly dangerous if the over-confident person doesn't value people with different opinions

Some inappropriate management approaches to change include

"...We spring change upon people we about explanation.....and expect them to nod their heads in submissive agreement.

We communicate the change via announcement......rather than by open dialogue.

We perceive resistance as a negative response...... and ignore that it is a legitimate attempt to protect the investment which got us to where we are.

We expect people to buy into our solutions......rather than enlist them to solve their own problems.

We believe the role of management is to make decisions......rather than to lead people towards solutions.

We demand that change occurs immediately......when we know that real, deep, permanent change takes time.

We see people who won't change as the enemy......rather than as proof that we haven't made the case for change.

We insist that change can occur without error......when we know that learning any new skill may involve initial failure.

We believe that people always resist change...... when we know for a fact that people embrace huge personal change and only resist those changes we attempt to force upon them.

Even though our change projects fail, we resist changing how we implement change, finding it easier to blame those who resist how we implement change..."

Peter de Jager, 2010

16. Poor Negotiating Skills

The 2 main mistakes in negotiating are focusing on price and not understanding the other party's points of view.

- price should be one of the last issues to be discussed. If it comes up too early, then it will side-track the negotiations.

- need to put yourself in the "other party's shoes" as the basis for understanding the thinking behind the other's position. Too often we become defensive when the other party makes seemingly unreasonable demands. Instead we should have the mindset of investigating the demands as opportunities.

Some questions to encourage this are

- what can I learn from the other side's insistence on this issue?

- what does this demand tell me about this party's needs and interests?

- how can I use this information to create and capture value?

Deepak Malhotra et al, 2007

17. Some Myths (6) (as identified by Simon Moss - see Fiona Smith, 2008d)


i) It is better to be an optimist than a pessimist - trying to block out negative thoughts can result in people being more sensitive to those negative thoughts

ii) Rational decisions are better than those made with intuition - research has shown that the conscious mind cannot grapple with the many possibilities that surround making a decision; it can only factor in a few at a time. However, the unconscious mind is like a supercomputer that can quickly prioritize the elements and give you a "gut feeling" about the right decision to make; it is more likely to be accurate than any analytical decision.

iii) Always start with a compliment before criticizing - as expectations are raised with praise, criticism can come as a nasty surprise. For moody people, they become more sensitive to criticism if they are praised first. Many people do not make the link between their good and bad qualities, ie to be effective you need to be organized, etc.

iv) Personality tests will help people change for the better - some believe that once they are characterized and labelled by these tests, they will use them as an excuse not to change, ie that is the way I am. NB This attitude under-estimates how malleable we are.

v) Always present your best side - when concealing your worst qualities, you are less inclined to like other people; by concealing these qualities you tend to focus on them

vi) Teamwork is the best way to get a result concentrating on being part of the team and identifying with a group can suppress individuality and creativity; the whole focus is on maximizing harmony in the group which can lead to "groupthink". Focusing on qualities which define someone as an individual makes them more assertive, ie they are happy to be different, to question the status quo and express their own points of view.

18. Too Much Reliance on Technology

Technology, such as the Web-based solutions (including e-mails, blogs, virtual worlds, etc), videoconferencing, etc, is seen as a way to reduce costs, such as travel (fares, time lost in travel, etc).

This encourages fewer face-to-face meetings which have certain characteristics that technology cannot replicate. For example, there is the information that people learn incidentally when they meet and work with people face-to-face.

The face-to-face encounter is less hurried, more personal and wide ranging. Studies (Fiona Smith, 2009y) show the results of videoconferencing is often poor quality communications, lack of awareness of others and less effective interpersonal relationships. There is less informal contact and lack of group memory (absorption of information about what others in the group are doing through general and casual conversations).

There is a greater level of intensity in the energy of a meeting with people face-to-face. This energy comes from immediate social interaction which includes body language and physical touch (handshake, etc).

Email is an impersonal, cold, plastic means of communication. It is difficult to resolve personal confrontations via Email. Angry tones, abrupt manners and even humour can be incorrectly perceived by readers of Email and frequent use of the medium results in the loss of personal, one-to-one contact which is important for effective communications and learning.

E-mails can be easily misunderstood and misinterpreted. It has been found that interpreting ambiguous e-mails can be very stressful.

19. "Inverted U" Concept

. Not understanding the "inverted U" concept, ie more is not necessarily better; it can make things worse. It is all about limits. It is linked to the s-curve (see earlier). It has 4 stages, ie

- stage 1 (relation is linear);

- stage 2 (relation levels off, ie area of diminishing marginal returns);

- stage 3 (extra resources have no effect on the outcome);

- stage 4 (more resources are counterproductive).

In graphical terms it looks like

organisational development change management

Some examples of "inverted U", ie arousal v. performance, ie right amount of arousal maximises performance but too much arousal can reduce performance; some examples

The same strategy that works well at first stops working after a certain point. Some examples

i) happiness v. income, ie in USA happiness improves with initially increasing income but peaks at US $75,000 and then decreases

ii) arousal v. performance, ie right amount of arousal maximises performance but too much arousal can reduce performance

iii) alcohol v. health, ie a small amount of alcohol is good for you, while too much is bad for your health

iv) jogging, ie gentle jogging is good for your health, but if done excessively it has a negative impact on the immune system, hormonal system (lack of testosterone causes of a lack of sex drive, slow muscle recovery and lack of energy) plus jogger's knee, ie a constant ache just below the kneecap

On the other hand, over the course of a lifetime, happiness generally follows a U-shaped curve, ie it is high when you are young, dips in middle age and rises again in later years. Middle age tends to be the time when obligations to career and family are at their peak, ie the stress of children-rearing and long hours at the office can have a negative impact on well-being

Additional research (Christopher Ingraham, 2015) has shown that married people are generally happier in middle age than unmarried people, especially if it is a "good marriage", ie where spouses regard each other as their best friends

20. Emotion, not knowledge, is a Catalyst for Change

Need to understand that emotion, not knowledge, is a catalyst for change. The concept of see-feel-change is another way of explaining this. Knowledge, information and data are really enough to spark change; people have to want change. You need to spark a desire to change.

"...It takes emotion to bring knowledge to a boil..."

Chip Health, 2011

For example, in US hospitals, there is a need for doctors to hand-wash more frequently to prevent patient infection. It is estimated that in the US thousands of patients die every year from preventable bacterial infections. Even though most doctors realise this, many do not adequately wash their hands to prevent disease spreading. To get the message across, after lunch a group of doctors in a hospital was asked to press their hands on agar in sterile petrie dishes containing a growth medium. The agar plates were cultivated and photographed. The photos were made public and revealed what wasn't visible to the naked eye, ie the doctors' hands were covered in blobs of bacteria that could be passed onto patients. The impact was impressive. As a result, hand hygiene compliance jumped from around 80% to 100%. One of the worst images was also used as a screensaver for the hospital's network of computers to ensure that all staff saw it.

This focus on feeling is unnatural in the private/public sectors where we tend to cling to rational and factual findings.

21. Importance of luck


. Never under-estimate the importance of luck. Use it to your advantage, especially as the future is unpredictable, ie be very opportunistic

. We need to handle uncertainty by using probability, ie based on past experience, there is a certain probability of the event happening again

(sources: Patrick Dawson, 2005; Lawerence Fisher, 2005; Edgar Schein, 2004; Annette Simmons, 2002; Robert Kriegel et al, 1996; David Stauffer, 2003; Peter Senge et al,1999; Peter Senge et al, 2005; Gavin M Schwarz, 2005; Ronald A Heifetz et al, 2002; Geoffrey Colvin, 2005b; Eric Bonabeau, 2003; Luke Collins, 2005b; Robert Winston, 2003; Mike Hanley, 2005; Edward deBono, 2004; Helen Trinca, 2001a & 2006; AIM, 2002; Dale Carnegie, 2003; Thomas Johnson, 1999; Bronwyn Fryer, 2003; Michael Watkins et al, 2003; Karl Albrecht, 2003; Catherine Fox, 2003; Harry Onsman, 2005; John Kotter, 1995, 1996a, 1996b & 2003; Susan Heron, 2006; Dennis Hall, 2006a; David T Snowden et al, 2007; David Pitonyak, 2005; Catherine Fox, 2007h; Robert Sutton, 2007; Fiona Smith, 2008d; Clayton Christensen et al, 2003; Deepak Malhotra et al, 2007; Fiona Smith, 2008l; Richard Branson, 2008; Rita Gunther McGrath et al, 2009; Seth Godin, 2007; Michael Mauboussin, 2009; Fiona Smith, 2009y; Alex J Pollock, 2010; David Rock et al, 2006; David Rock, 2009; Michael Mauboussin, 2009; Fiona Smith, 2009y; John Forster, 2010; Fiona Smith, 2010; Boris Groysberg et al, 2010; Dale Carnegie, 2003; Barrie Dunstan, 2010; Barrie Dunstan, 2010a; Nassin Taleb, 2010; Alex Pentland, 2010; Peter de Jager, 2010; Chip Health, 2011; Daniel Kahneman, 2012; Malcolm Gladwell, 2013; John Markoff, 2014; Abby Ellin, 2014)


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