When Stakeholders Thwart Change

People who are advantaged by the status quo tend to be averse to changing it.  Consequently, those who are favored in this way tend to herald its merits and distain the alternatives.  Why wouldn’t we continue the policies and strategies that generously rewarded them in the past.  As leader of an organization needing to entertain fundamental change, you need to be able to understand and manage such reluctance.

I served on an Air Force Scientific Advisory Board study of science and technology investment strategies.  We considered what investments were needed to assure “pervasive battlespace awareness.”  I commented that this can be enabled in many ways, but key stakeholders on the study committee reminded me that they produce satellites, airplanes, and missiles.  They needed those solutions to prevail.

This reflects their strong desires to sustain investments in incumbent capabilities and sustain current jobs.  Not surprisingly, this motivation is pervasive.  People do not want their economic supply chain to be disrupted.  They want paychecks, promotions, and pensions to flow as they expected.  They want this economic supply chain to perpetually persist.  Of course, that has really never been the case.

Despite easy automation of routine clerical jobs, manual labor is retained to keep people employed.  I encountered this when living in Europe.  Despite strong priorities and desires to sustain investments in incumbent capabilities, these positions were steadily disappearing.  It appeared that a primary motivation for sticking to the status quo was desires to avoid the costs of training people for new jobs.

Moving to professional personnel, there is no reason for each faculty member to prepare fresh class notes for each course.  Nevertheless, this time-consuming rite of passage continues.  Every faculty member gets to research and determine how best to teach western civilization, a topic taught for well over 1,000 years.  How many new ways can there be to do this?

Disciplines that dominate academic cultures tend to be sustained despite their seeming marginal relevance.  For example, in my world, many faculty members extoll the virtues of mathematics, even when purely mathematical solutions of the real problems at hand are intractable.  Faculty members who pursue empirical approaches to these problems are distained as applied practitioners – not pursuing fundamental knowledge.

The concern among these recalcitrant stakeholders is not employment.  It is self-esteem.  They have spent decades becoming highly skilled and expert at what they, and their colleagues, perceive to be fundamental and pervasively important skills.  The possibility that these skills, while still important, are now of limited rather than pervasive value is very difficult for them to accept.  Thus, they do their best to thwart change.

Fortunately, as Max Planck asserted, disciplines advance by funerals.  Thus, faculty members who strongly defend yesterday’s status quo eventually disappear, while making as much fuss as they can in the process.  Stakeholders thwarting change are recurring phenomena and a challenge for leaders trying to balance faculty interests.  However, time heals the challenges at hand with, of course, younger stakeholders, perhaps unconsciously, awaiting their turn.

A common refrain is, “We’ve always done it this way.”  Thus, for example, GM’s executives insist that the first year of a new car has to be a coupe, despite the fact that the public is only buying sedans and now, of course, SUVs.  GM eventually abandoned this practice after dramatically losing market share.  Executives thwarted change as long as they could.

Another example is college’s expectations of student attrition.  Within engineering, the common guidance was, “Look to your left and look to your right.  Next year only one of the three of you will still be here.”  Why is this long-held norm a good idea?  Why were “weed out” courses created?  Fortunately, student success initiatives have significantly eroded this tradition.

Underlying all of the above is a strong tendency to revere “the good old days,” even though they were not really good for everybody – or even anybody.  Before cars, New York City had to remove 100,000 tons of horse manure each year.  No one missed it.  Few people want to get rid of electricity, refrigeration, air conditioning and indoor plumbing.  The good old days were more old than good.

How about values and norms such as honesty, discipline, and hard work, possibly pulling oneself up by one’s bootstraps?  Such values and norms tend to only make sense for those stakeholders with requisite opportunities.  These are often the stakeholders with the economic resources to be healthy, get educated, and pursue opportunities.  Others may be able to relate to these aspirations but be in no position to pursue them.

Beyond concerns about losses of jobs, income, benefits, and self-esteem, there is another primary reason to thwart change.  Key stakeholders may not trust change in the sense of being wary that their interests will be discounted and ignored.  Their experiences tell them that no one will protect them from the downside of change.  History provides much evidence that they are correct.  The winners relish their victories and disdain the losers, even though losing was built into the game for many people. 

Several years ago, I studied how defense companies succeeded in transitioning from defense to commercial markets.  I could only find one company that transitioned successfully while retaining the majority of the same employees – Kaman Corporation.  It is much more common for companies to redeploy financial and physical assets without retaining the previously valuable people and competencies.

In another engagement, I helped a large defense electronics company consider a transition to commercial electronics.  The most outspoken opponents were the engineers who believed they worked on the cutting edge of technology in defense and would be relegated to mundane applications in commercial markets.  The company decided to abandon these commercial aspirations.

I had a similar experience with the transition from my first to second companies.  We had long felt that we needed product lines that provided recurring revenue beyond our service revenues for research and design services.  In developing a portfolio of products, we learned that customers wanted the tools hosted on IBM PCs, or maybe Apple Macs.  Our software staff had complete disdain for these platforms compared to the $100,000 engineering workstation to which they accustomed.

Consequently, the launch of the second company included only one of the 20+ software engineers of the first company, as well as one person in finance and one in marketing.  We had to consciously build a new culture around low-end work stations, an 800 number for customer support, and other functions customers expected.  Also of great importance were product upgrades every 12 months or less.

Can everybody win from transformational change?  You need well-articulated plans for those who want to be part of the transformation, including new roles, objectives, and incentives, as well as the training required to succeed.  However, you should not expect everyone to join the process.  Many – hopefully not most – of your best people will have other opportunities and priorities.  For some, their self-images – e.g., as mathematicians or software engineers – will not be compatible with where you are headed. 

You can expect that significant stakeholders will attempt to thwart your aspirations for fundamental change.  Their reasons may be quite rational, far from capricious.  This will be less of a problem if you understand and expect such reactions.  Your primary objective is to lead the organization forward to sustainable success.  Your job is not to make sure everybody is happy.

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