Change

Formula for (Digital) Change

During our research, we stumbled upon an interesting concept: a formula for change. It was promoted by Dick Beckhard (Organizational Transitions, 1977) and Reuben Harris while attributing its creation to David Gleicher. While David Gleicher did propose an earlier version of the formula, the formula Beckhard took was from Kathleen Dannemiller’s version.

The formula compares the success of change programs to the relative strengths affecting that change. It is as follows:

C = D x V x F x CL > R

  • C = Change
Four factors are needed for change, whether for the individual or organization. These factors are:
  • D = Dissatisfaction with how things are currently;
  • V = Vision of what is possible and tangible;
  • F = First concrete steps that can be taken towards the vision;
  • CL = Creative Leadership to navigate toward the vision.

If the product of these four factors is greater than:

  • R = Resistance,

then change is foreseeable.

D, V, F, and CL are multipliers; because of that, if a particular factor is missing or low, then the product will be low, and the resistance to change will be stronger. The idea is that if you are seeking some significant, system-wide change, several core elements need attention.

We need a critical mass of the organization to:

  1. Be dissatisfied (D) with the way things are (concerning the proposed change). This often doesn’t come until some force from outside the organization creates a crisis for the organization.
  2. To have a vision (V), an image or an idea of what improvement would look like, grounded in the hopes and dreams of employees or members. An old saying among leaders is – – “Being right is only one-quarter of the battle.” It’s not uncommon for leaders to have a vision of what improvements are needed. The problem is that just communicating the vision (or mission or strategic plan) will not bring change.
  3. With a clear sense of what needs to be done as first steps (F). This means having a picture of what we can do differently in the short term that will move us toward that vision. Four major factors for leaders to take into account are:
    1. What competencies need to be developed or strengthened for people to function in the changed situation? People don’t like to feel incompetent, and change often creates that feeling.
    2. People are often hesitant to accept and implement the change because they fear losing friends and colleagues in opposition.
    3. Having the needed resources to make the change.
    4. Beginning to create an alignment of structures, processes, and practices in harmony with the new way.
  4. Creative Leadership could be a consultant, mentor/coach, or other measures. It is most often an outside set of eyes. Remember IBM’s Business Transformation in 1993, when Louis Gerstner Jr., who had recently joined the company as CEO, had the advantage of being regarded as an outsider, allowing him to kick-start the process.

Resistance (R) is likely to be present in all change efforts. The combined weight of the dissatisfaction, vision and first steps needs to overcome that resistance. That means if any of those elements (D, V, F) is “0”, the change will not be possible.

It is useful to use Chris Argyris’s intervention theory in applying the change formula. The theory suggests that the more people you get involved in diagnosing the situation, exploring options, and shaping a picture for the future, the more likely you are to develop a sustainable commitment in people under pressure and over time.

Change in the Digital Age

We made a few adjustments to the formula to represent change due to digitalization:

C = dD x dV x dF x dL > R

  • C = Change
Four factors are needed for digital change, whether for the individual or organization. These factors are:
  • dD = Digital disruption from how things can/should be done better, faster, and cheaper;
  • dV = Digital Vision of what is desirable, viable, and feasible;
  • dF = First concrete digital steps that can be taken towards the vision;
  • dL = Digital Leadership to navigate toward the digital vision.

If the product of these four factors is greater than:

  • R = Resistance,

then change is foreseeable.

dD, dV, dF, and dL are multipliers; because of that, if a particular factor is missing or low, then the product will be low, and the resistance to change will be stronger. The idea is that if you are seeking some significant, system-wide change, several core elements need attention.

We need a critical mass of the organization to:

  1. Being disrupted (dD) by how things can be done digitally (concerning the current state). This often doesn’t come until some force from outside the organization creates a crisis for the organization.
  2. To have a digital vision (dV), an image or an idea of what improvement would look like grounded in the hopes and dreams of employees or members. An old saying among leaders is – “Being right is only one-quarter of the battle.” It’s not uncommon for leaders to have a vision of what improvements are needed. The problem is that just communicating the digital vision (or digital mission or digital strategic plan) will not bring change.
  3. With a clear sense of what needs to be done as the first digital steps (dF). This means having a picture of what we can do differently in the short term that will move us toward that vision. Four major factors for leaders to take into account are:
    1. What digital competencies and capabilities need to be developed or strengthened for people to function in the changed situation? People don’t like to feel incompetent, and change often creates that feeling.
    2. People are often hesitant to accept and implement the change because they fear losing friends and colleagues in opposition.
    3. Having the needed resources to make the change.
    4. Beginning to create an alignment of structures, processes, and practices in harmony with the new way.
  4. Digital Leadership could be a digital agency, consultant, mentor/coach, or other measures. It is most often an outside set of eyes.
  5. Extensive corporate research, discussed in the book Leading Digital by George Westerman c.s., revealed that Digital Masters excel through digital leadership: they have a strong overarching vision, excellent governance across silos, initiate many digital initiatives generating tangible business value, and create a strong digital culture.

Resistance (R) is likely to be present in all change efforts. The combined weight of the disruption, digital vision, first steps, and digital leadership needs to overcome that resistance. That means if any of those elements (dD, dV, dF, dL) is “0”, the change will not be possible.

Impact analysis

Obviously, to understand the deeper impact of change, we may need to analyze how primary and secondary activities of the value chain may be affected by digital change, and even extend our analysis beyond the boundaries of the organization and include the larger value network.

According to Michael Porter’s theory on building ‘Competitive Advantage,’ the primary activities are inbound logistics (upstream), operations, outbound logistics (downstream), marketing and sales, and customer service. The secondary activities support the primary activities and include procurement, finance, human resource management, infrastructure, technological development, data management, legal management, security management, and housing.

References:

  • Beckhard, R 1969 Organization Development: Strategies and Models, Addison-Wesley, Reading, MA.
  • Dannemiller, K. D., and Jacobs, R. W. (1992). Changing the way organizations change: A revolution of common sense. The Journal Of Applied Behavioral Science, 28(4), 480-498.
  • Jacobs, R. W. (1994). Real-time strategic change: How to involve an entire organization in fast and far-reaching change. San Francisco: Berrett-Koehler.
  • Wheatley, M. J., Tannebaum, R., Yardley, P. Y., and Quade, K. (2003). Organization development at work: conversations on the values, applications, and future of OD. San Francisco: John Wiley & Sons.
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Edwin Korver

Edwin Korver

Architect of ROUNDMAP™ - Advancing Grandmastership of Business™ ✪ Business Model Matrix™ ✪ Polymath ✪ Generalist ✪ Systems Thinker ✪ Board Member, CEO CROSS-SILO BV

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