Dealing with change and why we tend not to

Posted by | March 12, 2018 | Powered By Change | No Comments

In my book ‘Powered By Change‘ I reference a fascinating piece of research that was conducted by the Association of Insolvency and Restructuring Advisors. The Association calculated that, out of a cross-section of companies of all shapes and sizes, 52% of businesses go bankrupt primarily because of “internal triggers” — meaning those in-house issues that the management has decided in favour of or against; and tried to execute accordingly. Another 15% go bust due to “external triggers” — those things that happen outside the company that management doesn’t do anything about. 24% of firms sink due to a combination of those internal and external factors that management don’t do anything about, 8% fail because of events beyond their control, and only 1% die simply due to what could only be attributed to pure bad luck.

The conclusions are stark. 91% of the reasons that these companies went out of business is down to the way that people inside an organisation have reacted or failed to respond to the various stimuli that ended up destroying their firms. Looking deeper at cases of failure, there tends to be events that take place that change the landscape, market, internal dynamic, product viability, or something else. Either way, things changed. One level deeper, at the core of the issue, we can observe that the fundamental component in this failure is how people handle things changing.

The findings may be of a business nature, but I’d attest to the data is about humans rather than just humans inside companies. Many of us have heard that today is the slowest pace of change we’ll ever experience. Others have got to grips with the fact that the only thing we can truly predict is that change happens. Nonetheless, evidence shows us that in the face of perpetual change, the majority of people tend to resist it. In contrast, if we were to internally process these concepts in a productive and opportunistic manner, we would be able to maximise the advantage that change brings. This, of course, would require changing the way things are done.

A valid question would be: why? Why is it so hard for us to see change as a positive concept? Why do we resist change even if we could equally decide to be powered by it? The entirety of ‘Powered By Change’ is about this topic, but taking it from a purely human angle, as I deeply investigate in the second chapter called “People”; I explore the various factors and potential solutions. For now, as a snapshot, I’d like to cover a few of the salient points.

My general view is that the benefit of changing has to outweigh the cost of changing, but also, very importantly, the cost of not changing – in other words, the cost of staying the same.

This cost/benefit analysis is something that seems remarkably simple but when it’s applied practically, we often make huge errors of judgement in terms of:

  1. What the benefit of change would/could be.
  2. What the cost of that change would/could be.
  3. What the cost of not changing would/could be.

Errors of judgement in those three areas increase the chances of failure exponentially. Our human biases are so well structured that our answers tend to be as follows:

  1. Not a great deal of benefit, at least not in the short-term where my targets are.
  2. As it’s unknown, probably massive…not least due to the chance of failure.
  3. Relatively low. Everything is pretty much fine right now so it’s best to stick.

As you can see, the likelihood of any positive change being made is exceptionally low – meaning that the likelihood of negative impact is seriously high.

In ‘Powered By Change’ I present numerous toolkits that can address this risk. One I’m fond of is a process that assists people through six stages of uncertainty, resulting in facts that we can know to be true. The six stages are:

  1. Speculations – starting with sheer guess-work without prejudice.
  2. Explorations – choosing some areas to explore, but still without prejudice.
  3. Scenarios – running some potential stories in an imaginary, yet relevant context.
  4. Projections – plotting a few aspirations against the scenarios.
  5. Predictions – placing some targets against the aspirations that have been projected.
  6. Facts – gaining the data points that prove or disprove the predictions.

The ultimate output of this approach is learning. It’s critical that there isn’t an immediate casting of blame if what we thought would happen, didn’t. The vital thing is to gain the learning as fast as possible so that the process can happen again with even more insight. This is where I disagree with the slogan “fail fast, fail often”. I prefer “learn fast, learn often”. This mindset is a change-positive one. A mindset that sees opportunities in the change and chooses to play with what’s possible. A mindset that is truly powered by change.

Stay tuned for my next blog next week that examines why things change, what is the impact and what does it feel like and look like for individuals and businesses. You can unlock additional insights and bonus content by pre-ordering your copy of Powered By Change. When you pre-order on March 15th or 16th, and you will be registered for one of four “Blade” webinars — extra book insights and a deep dive with me in an online interactive Q&A format —  on how to harness perpetual change to enable long-lasting success.


Leave a Reply