Organisational Change Management Volume 2

31. Nine Basic Instincts

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. Need to understanding our 9 basic human instincts when asking people to accept change (Andrew O'Keeffe 2009), ie

i) loss aversion (default position, ie assumes the worst, especially if uncertain; with focus on safety first for good performance & when exploring things; people are motivated by the avoidance of loss rather than the opportunity to gain as it is a survival mechanism. Thus change needs to be explained as a gain and not as a loss or a situation involving too much uncertainty with the potential for loss; need to acknowledge losses to build trust. It explains resistance to change & reaction to feedback, like performance reviews, ie people's innate preference is to dwell on negatives as they are most concerned about potential losses (including self-esteem, etc); acknowledge any losses (financial, status, position, etc) to build trust; if feeling threatened, people will fight frantically; as change is felt at a personal level, need to work at this level; need to understand the 4 responses to fear or attack

- withdrawal (avoid &/or escape from danger)

- immobility (freezing)

- defensive aggression (appear dangerous or fight back)

- submission (appeasement)

ii) emotion before reason (emotional instincts dominate, ie information is screened first on emotions - how it makes me feel - and later on logic; quick to jump to conclusion/judgment based on initial emotional reaction; negative news is given top priority. The brain first receives messages at the amygdale - the emotional processing part of the brain - before messages are received by the neocortex ‐ the rational processing part of the brain. The challenge is to influence people's immediate response to change ‐ before reason sets in; people make sense of events based on how they make them feel & this impacts on motivation & performance. We are more productive when positive.

Many times we are not rational in our thinking. Rational conveys an image of greater deliberation, more calculation & less warmth; with a person's beliefs and preferences being reasonable. Yet non-psychologists, especially economists, look at rationality as being internally consistent rather than reasonable. Humans are not irrational but need help to make more accurate judgements and better decisions. To be rational requires more effort and we suffer from myopia (The Economist, 2104j), iethe failure to give adequate weight to future benefits over a immediate pleasures/short-term gain/instant gratification/immediate satisfaction. Examples of myopia

i) people choosing not to save for old age, ie spend now

ii) exposing themselves to addictive substances, ie get short-term "kick" but long-term pain, eg smoking (nicotine addiction plus long-term health problems like cancer, heart, etc). Similar story for alcohol, other additive drugs, etc

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

iv) only 1 in 9 people who underwent heart surgery changed their life-style; yet these people had the ultimate motivation, ie possible death

v) people who drive vehicles after drinking alcohol &/or taking other drugs)

Brain is not rational . For decades most economists assumed we were all rational which led to flawed concepts like the University of Chicago's "efficient market hypothesis" that gave rise to the "passive or indexed" investment industry. Recently neuroscience has challenged the rational expectation assumptions. We now understand that we make decisions that do not remotely conform with optimal choices. This is one of the reasons financial markets are prone to periods of excessive fear and greed which are manifested in cycles of booms and busts.

We all suffer from
- illusion of control (our belief that we can control a completely uncertain outcome when we can't)
- overconfidence (unrealistically high faith in our intelligence, intuition and judgement)
- framing bias (responding to the same choice differently when it is presented in various ways)
- ambiguity aversion (selecting options certain, or wit a higher probability, of pay-offs)
People who suffer most from the above behavioural biases are more likely to invest in hybrids than others. We need to understand better how to handle these behavioural biases that can result in poor decisions rather than just banning products. For example, focusing on behavioural issues in the cigarette industry with sustainable reforms to advertising plus a combination of education and regulations on the sales process has radically altered consumers usage of cigarettes

iii) first impressions to classify (categorise people, situations & experiences on first impressions using intuition rather than time-consuming analysis; first impressions are hard to change as they are based on intuition; we then tend to select evidence that supports first impression; more time for assessment does not always increase accuracy of first impression. This involves experience and emotions plus perceptions. Part of this involves perceptions & sense making; with anxiety increasing if we cannot make sense of something. Classifications are binary, ie "either/or", "good/bad", "us/them", "loss/gain", "black/white"etc. Thus influencing first impressions is critical to influencing opinions and reactions; have 7 words &/or 2 seconds to create the first impression; want instant results)

iv) gossip ‐ sharing "social chitchat"(people are hardwired to gossip, ie "social chitchat", "guess what I have just heard". It helps uncover useful information and maintain social alliances. Gossiping illustrates how we communicate, and is best done in groups of fewer than 5 people; use it to your advantage; 2/3 of conversations are social chitchat (we spend on average 20% of the day in conversations); average manager has 7.4 main "gossip connections". It is part of vocal capability in normal, healthy group interaction; gossiping is equivalent to grooming in other primates and is used to form & maintain alliances/bonds; seek & share information, especially with people we like; touch is important for humans in social bonding, etc; linked with networking & reciprocity; use gossip to your advantage, ie don't try to stop it, make it effective, eg encourage social "get to-gethers"for chitchat; social groupings of around 4 preferred, ie able to hold people's attention; electronic equipment, like phones, etc, are tools for social chitchat plus status symbols. Keen on stories as used to educate by passing on information, provide links with emotions, make sense of uncertainty, are a way to communicate and demonstrate identity)

v) confidence before realism (humans are hardwired to deny reality, ie to emphasize what is possible and to underestimate what is practical, eg plan optimistically and disregard implementation; need a balance between "what is possible"& "what is practical". We chase fads or simplistic solutions, etc; self-interest dominates; people are over-confident and/or arrogant; use confidence & optimism to discount & ignore reality. This forms the basis for repeating the same mistakes from generation to generation. It explains how we underestimate the required effort, resources and time, and the capability of people to manage change. If we have high expectation/confidence/optimism, we perform better; need 3 times more positives than negatives to flourish; self-interest (WIIFM) dominates (balance it with altruism); we are more likely to see negatives/mistakes in work other do than our own; importance of apology. Use of training to understand level of competency; tend to reject information that threatens our assumptions; need to be aware of group think/shared views/ rationalisations, etc that result in denial of implications; need to prioritise & focus on vital few that have a major impact; don't confront poor performance as people hold an "inflated self-view"of themselves. People are over-confident, ie "illusory superiority"(with the less competent having the greater over-confidence). This can occur when using forecasting based on judgment & statistical models, such as

- economists forecasting recessions (eg in the 1990s, 12 months in advance they predicted only 2 of the 60 recessions around the world)

- Future "super-powers"predictions

. in the 1980s, Japan was to be the next super-power

. in the 1990s, the 5 Asian tigers (Hong Kong, Taiwan, Singapore, Thailand & South Korea) were to be the next super-powers

. very few predicted the rise of BRIC (Brazil, Russia, India & China); the last 2 had population challenges

More on future "super-powers"predictions, ie Japan & 5 Asian tigers

- in the 1980s, Japan was to be the next super-power owing to its speedy economic recovery and growth since the end of World War 2 (1945). The period of rapid economic growth between 1955 and 1961 paved the way for the "Golden Sixties,"the second decade that is generally associated with the Japanese economic miracle. In 1965, Japan's nominal GDP was estimated at just over $91 billion. Fifteen years later, in 1980, the nominal GDP had soared to a record $1.065 trillion. Its phenomenal growth ended in the early 1990s with the "Japanese asset price bubble"and it has not recovered (2013)

- in the 1990s, the 5 Asian Tigers (Hong Kong, Taiwan, Singapore, Thailand & South Korea) were to be the next super-powers. These nations and areas were notable for maintaining exceptionally high growth rates (in excess of 7 percent a year) and rapid industrialisation between the early 1960s and 1990s. They were developing into advanced and high-income economies, specializing in areas of competitive advantage. For example, Hong Kong and Singapore have become world-leading international financial centres, whereas South Korea and Taiwan are world leaders in manufacturing information technology. The Asian Financial crisis (1997) ended their phenomenal growth

(source: Wikipedia, 2013d & e)

vi) empathy and body language (use to build relationships; involves theory of mind (sense of self); involves reading body language, especially facial, so able to understand what people are thinking & feeling; people will read your body language rather than listen to your words as a way of determining your true intentions; if inconsistencies between words, body language message wins; importance of "face-to-face"meeting. Need to show empathy with people; need to develop listening skills, ie need to listen to, & respect, others' wants, needs, dreams, inspiration, etc; focus on individual strengths & cover weaknesses by others' strengths; treat people as individuals as the basis for a meaningful relationship, ie know their identity (family history, hobbies, interests, achievements, etc); explains why we don't follow-up, ie poor on implementation; fads are favoured, ie a tendency to go for simplistic solution(s) that can mask the real problem(s))

vii) contest and display (focus on looking good to gain an advantage; people spend time, money and energy to look good and improve their place in the "pecking order"; people are sensitive about job titles, condition of employment & position in "pecking order"/hierarchy, etc; conspicuous consumption & leisure are evidence of affluence (material possessions) & superiority re power/wealth/position, etc. Stress associated with social standing ie higher in the hierarchy, less stress (fight/flight response); gender difference, ie males into power, females into inclusion; body language used to display power & dominance. The challenge is to stay grounded on the fundamentals, often involving slow and more complex thoughts and actions)

viii) community ‐ social belonging (people are social animals who like the company of others, fear social exclusion, we need connection with others, friendships and exchanges of affection and dependency, etc; are comfortable with family sized groups of around 7 people (direct reports, c'tee members, team size, group size, etc); if less than 5 don't feel that belonging and if 9+ too many potential relationships (research on users at Facebook suggests around 7 "most contacted"friends). Villages of up to 5 families and tribes include up to 150 people; memory is challenged if more than 7 things to remember, eg phone numbers. In large organisations, focus on creating stronger bonds via small teams/groups rather than trying to unify the wider organisation. Need to concentrate on this level of connection productivity, eg use family-sized teams and village-size units and tribe-size departments in the change process. Need to be careful of stereotyping; group think has had evolutionary advantages, ie clubbing together against the tiger or a gang of strangers has obvious survival value. In more recent times this inclination to get caught up in group think has had less constructive outcomes, ie the madness of crowds with their ability to be manipulated by demagogues, the collective bloodlust of lynch mobs, etc. This can make people do things as a mob that they would do on their own as individuals; there are plenty of cases where impartiality, objectivity and disinterestedness (not uninterestedness) are important in making civilisation civilised, ie

"...administration of justice, scientific exploration, education, adjudication of competing interest in the daily life of commerce and trade, fairness in the allocation of resources and social goods - in all these cases, bias distorts and causes harm..."

AC Grayling, 2014

ix) hierarchy and status (people function through hierarchies; when hierarchies are dysfunctional, positions and power responsibilities become unclear. This can result in people abusing their positions of power, eg take personal advantage of their position, disregard views and feelings of others, etc)

Using emails to illustrate the impact of natural human instincts

i) Loss Aversion (CYA)

ii) Emotion before Reason (reaction to meanings of email rather than content)

iii) First Impressions to Classify (first message out, most likely believed)

iv) Gossip (sharing information, etc - social chitchat)

v) Confidence before Realism (overstate what can be achieved)

vi) Empathy & Body Language (unable to read body language as not face-to-face)

vii) Contest & Display (let people know your achievements)

viii) Social Belonging (brings people together; inclusion & exclusion)

ix) Hierarchy & Status (able to have a go at people)


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