Lessons from Engineering in Managing Change!

I studied Engineering in the 20th century. Little did I know that concepts from engineering will teach lessons in managing change.

Inertia can teach us a lot about implementing organizational change. Most organisations are always in a state of inertia popularly known as Business as Usual (BAU)!  Every organization will remain in its course (rest or movement) forever if no new forces act upon it. Some external and / or internal forces will have to operate on the organization to change its state. Does this remind of Newton’s first Law of Motion.

Newton’s second law defines the relationship between acceleration and applied force. For business this means, if you want big change, you must apply bigger force. Newton’s third law is relatively simple. Every action produces equal and opposite reaction. In organizations even a simple change in office timings or canteen facility are met with resistance isn’t it.

Newtons Law of motions – Inertia, Acceleration & Reactions guide us in driving change but before using them, it is important to understand the various levers and dynamics of change management. This can be learnt from Archimedes and Thermodynamics.

Archimedes reportedly said, “Give me a lever long enough and a fulcrum on which to place it and I shall move the world." He proved that force could be multiplied by applying it to a lever at a particular distance from a fulcrum.

In any change programme, it is critical to find the right levers and push them hard enough. This law of lever helps us understand what to change and how to maximize the return on efforts by changing the things that will produce the greatest results.

We can identify four types of levers that can bring about changes in organisations.

·       First, look at the macro-changes in the industry and study its impact on organisation using PESTAL analysis – Political, Economic, Social, Technological, Environmental, and Legal.

·       Second examine the levers such as organizational vision, mission, values, culture, leadership, people, brand, board, governance, risk, compliance etc.

·       Third look at the metrics and economic levers - customer acquisition and retention, revenue increase, capital allocation, profitability, balance sheet, income statement, debt, cash flow, inventory, costs optimization.

·       Fourth understand how the organization—policies, practices, structures, processes, systems, technology, targets, and measurements—affect performance and the metrics directly or indirectly.

For any successful organizational change, we must focus on the second lever. The fact is organizations don't just change because of new systems, processes, or structures. They change because the people within the organization adapt and change.

But how do we induce this Change?

Organisations and business are dynamic, adaptive, and often function in a closed loop system. Both Change and Work are dynamic and requires Organizational Energy. Organizational energy can be defined as the extent to which an organisation has mobilized its emotional, cognitive, and behavioral potential to pursue its goals.

But where is this energy to come from? This is where we jump into ‘The Laws of Thermodynamics’. 

The First Law of Thermodynamics – Energy can be changed from one form to another, but it cannot be created or destroyed.

In organisations there is always a tendency to resist change. This means maximum energy is being used to resist change, and hence it is not available for making change. Kodak and Blockbuster, both at different point in time resisted change.

For a business, the energy one puts into the business, will be transformed into the energy of the business. The trick is to put the energy into the right parts of the business. The energy required to change must come either from within a closed system (from your manager or dept) or from beyond the boundaries of the closed system (market, customers, suppliers, vendors, partners, auditors, consultants, management, board, or shareholders).

Many leaders turn to negative energy generation, emphasizing on creating a ‘burning platform’ to motivate people. The Best Leaders rely on positive energy generation by painting new vision and involving energetic, enthusiastic, creative, open-minded people in driving change. Businesses that can direct energy to fast and positive transformation are able to exploit many more opportunities than enterprises mired in resistance.

Today most organisations are in state of permanent flux and battling high entropy. This naturally brings us to, The second Law of Thermodynamics - For a spontaneous process, the entropy of the universe increases.

This law is intuitive and easy to observe. It simply states that all systems tend towards disorder or disintegration or entropy.

How many organizations are closed systems, inwardly focused, rigid, working in silos and monotonous? No wonder they gradually deteriorate because of the entropy. Remember Nokia and its failure to change. Organisations fail to change because their minds and systems are closed. Their leaders’ pride in imitating ostrich mentality.

Entropy generally creeps in due to distractions, wavering focus, rapid unplanned expansion, unrelated diversification, changing market conditions, constant equipment breakdowns, product obsolescence, faults in software and hardware, quality and process failures, nepotism, misalignment, poor governance & compliance, risk failures, and many other such elements.

No organisations are frictionless. Given enough time every organisation and system are prone to these disruptions.

Fortunately, unlike thermodynamic systems, a business can reverse the impact of entropy.

To avoid entropy, organisations must welcome new ideas, open the system, hire new people, nurture talent, share new information, monitor change programmes, measure performance, mitigate risks and strive to foster a culture of innovation.

Despite these efforts, change management programmes often fail. Not all change management programmes are 100 % successful. The failure rates are grim reminder of the third law of Thermodynamics.

The third Law of Thermodynamics - A perfect crystal at zero Kelvin has zero entropy.

This law shows that nothing in the Universe is perfect. The process may be smooth and seamless, yet zero entropy is not achievable. That is why we adulate Six Sigma. Any change programme will have its share of ups and downs, success and failures, intended and unintended consequences.

This means that organisations must keep their business goals and change programme realistic and like any good project manager allow for contingency planning. 

For any change to occur, we must apply more energy to the system than is extracted by the system.

Eventually, sustainable change only takes place when managers identify the right levers, manage the dynamics of change, and ensure the changes, they are communicating are clear, compelling, and credible similar to the Laws defined in Engineering!