In 1983, McKinsey consultant Julien Phillips published a paper in the journal, Human Resource Management, that described an “adoption penalty” for firms that didn’t adapt to changes in the marketplace quickly enough. His ideas became McKinsey’s first change management model that it sold to clients.
But consider that research shows in 1975, during the period Phillips studied, 83% of the average US corporation’s assets were tangible assets, such as plant, machinery and buildings, while by 2015, 84% of corporate assets were intangible, such as licenses, patents and research. Clearly, that changes how we need to approach transformation.
When your assets are tangible, change is about making strategic decisions, such as building factories, buying new equipment and so on. Yet when your assets are intangible, change is connected to people — what they believe, how they think and how they act. That’s a very different matter and we need to reexamine how we approach transformation and change.
The Persuasion Model Of Change
Phillips’ point of reference for his paper on organizational change was a comparison of two companies, NCR and Burroughs, and how they adapted to changes in their industry between 1960 and 1975. Phillips was able to show that during that time, NCR paid a high price for its inability to adapt to change while it’s competitor, Burroughs prospered.
He then used that example to outline a general four-part model for change:
- Creating a sense of concern
- Developing a specific commitment to change
- Pushing for major change
- Reinforcing and consolidating the new course
Phillips’ work kicked off a number of similar approaches, the most famous of which is probably Kotter’s 8-step model. Yet despite the variations, the all follow a similar pattern. First you need to create a sense of urgency, then you devise a vision for change, communicate the need for it effectively and convince others to go along.
The fundamental assumption of these models, is that if people understand the change that you seek, they will happily go along. Yet my research indicates exactly the opposite. In fact, it turns out that…