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Only 30 percent of organization transformations are actually meeting their objectives. We all know examples of this, some of them quite public, with mergers or acquisitions turning out badly. In recent years, it has become more and more apparent that the reason organizational change does not succeed is largely due to human factors, be it that company cultures were not compatible or that the resistance against truly adopting a change was greater than expected. There are many other reasons, of course. For example, with regards to strategic fit, poor design, or simply that the objectives had not been realistic from the start.
In this article, I would like to focus on the adoption of change and how we could rethink change management for digital transformations.
Imagine you were watching a documentary showing you how to floss your teeth and providing you with data on how flossing your teeth will reduce your risk of developing cavities. Will you start flossing for a day, a week, regularly or maybe not at all? What matters in the long run is that you create a new habit, but as with flossing, it seems a new habit is hard to adopt.
Behavioural economics/science has researched how humans do not always behave according to data considerations and follow rational decision-making— for more information on this topic, reference books such as “Predictably Irrational” by Dan Ariely. The concepts of nudging, setting triggers to form new habits, and creating a winning choice architecture are used in behavioural economics research to support people to make better choices.
“I would like to illustrate the behavioural economics concepts with a wonderful example, recently gone viral from German supermarkets during the Covid-19 pandemic”
I would like to illustrate the behavioural economics concepts with a wonderful example, recently gone viral from German supermarkets during the Covid-19 pandemic. As the panic hoarding of toilet paper created a shortage, some supermarkets were charging the normal price for the first pack and then increasing the price for additional packs (additional 5 EUR for second package, 10 EUR for third etc.), with the excess income going to Covid-19 aid programs. This is an excellent example of a choice architecture that dissuades people from making a choice that causes harm to their fellow citizens. It does not just use data declaring how much toilet paper you actually need, nor does it involve prohibitions or security forces, as some other countries have seen. These German supermarkets just made it significantly less attractive to hoard toilet paper and, thus, create an artificial shortage. It was a nudge to do the right thing, a choice architecture that made it harder, not impossible, to do the wrong thing.
Back to the flossing example. If we want to create the habit of flossing, we could use simple reminders like putting the floss in front of our toothbrush to make it harder to brush our teeth without thinking of flossing first. We could also put flossing in our calendar with a voice message reminding us how unpleasant cavities can hurt or with just the noise of a dentist drilling. We could ask our partner to remind us, adding a social element to the trigger. This would need to go on until we do not even think about flossing anymore, it becomes a kind of “muscle memory” and we have created a new habit.
When we communicate organizational change in corporations, we often still refer to concepts like creating a “burning platform” and formulate a strong data-driven “why” to explain the organization’s need to change. We use PowerPoint slides with data and ask employees to get excited about the new ways of working. Nothing wrong with continuing that, but it is not enough to drive behavioural change especially if habits are involved.
In digital transformations, we have become savvier. We learned from the best tech companies that the user experience is key, and we increasingly involve design-thinking in creating new solutions and processes. However, in many cases, the new solution is not as easy as your favorite app on your latest phone, and there is still an alternative, habitual, way of getting the same results. Let me provide you with an example for knowledge management, given its importance in larger organizations. In my experience, most employees still share information, including attached documents, via email. For knowledge management in teams, this is obviously not ideal, for many reasons like version control, access to the documents and knowledge transfer if employees are moving on, to name just a few.
To improve this knowledge management problem from a user experience point of view, you would create tools that allow employees to store documents easily. You would also allow them to find relevant documents just as easily through relevant access rights, a brilliant taxonomy—not easily achieved—and a state-of-the-art search engine. Not a light task to accomplish. However, if you succeeded in creating this wonderful tool, you would have managed to minimize the “friction” for users of the novel knowledge-management tool, which makes it more likely to be fully utilized. On the other hand, there will still be many employees who had developed the “muscle memory” for the old style and will continue using emails to share documents. How could you effectively change their habit? As we strive to decrease “friction” in design-thinking, you could think about increasing “friction” for the old habit; for instance, when employees try to attach a document to an email, a reminder of the new knowledge management system could pop up which they would first have to acknowledge before they would be able to attach anything. Alternatively, you could use social proofing as a nudge, by sending a message to all stating how many employees have already stored or searched documents in the new system. You could celebrate the 100th person storing or opening a document in the new system.
Bottom line, don’t only rely on convincing people with data, wherever habits are involved. Change management needs to become much more creative if our ambition is not just launching changes, but truly implementing sustainable changes in an organization.