Homo Economicus makes a bad change manager!

In this article, I want to talk about change and change within organisations. About substantial changes in the way an organisation functions and how it is structured. Think of a large-scale reorganisation, a drastic change in work processes, the introduction of heavy ICT projects, integrations and mergers. In short, changes that have a major impact on the organisation and the people working there.

And something strikes me about those kinds of large-scale change processes: they often don’t go well, they never go smoothly and they rarely go according to plan. You all know the examples:
The reorganisation of the Tax Office
The decentralisation of youth care
The introduction of the public transport chip card.

In the case of government projects, the scornful reaction is usually: yes, but they are not managers either.

However, where real managers are at the helm, things do not always go smoothly as a rule either. The reorganisation battlefield is littered with change projects that died too early. Let me cite a few examples:
The introduction of a new ICT platform within ING. The digitalisation of the entrepreneurial bank. Stopped when new CEO took office and wrote off 250 million.
The merger of KLM and AirFrance. Roiling across the street, subversive actions of the Dutch State as shareholder. A merger drama as Shakespeare could have written it.
And a little longer ago: the takeover of GB Inno by Carrefour. A financial bloodbath.

Rarely, very rarely, do change processes turn out as expected and desired. Usually it is a lot of fuss not to mention drama. Why is that? Why does change prove so terribly difficult time and again? What could be the reason? In this article, I start from the common view of change management and mirror it with some essential characteristics of the people who have to undergo these changes. An obvious mismatch between common approaches and human needs becomes instantaneously apparent. I then try to describe an alternative approach or perspective. Finally, I question the role of leadership within this alternative dynamic perspective on change.

Change Management as a mechanistic project
The dominant Western view of management leans heavily on the Taylorist perspective on organisations. Frederic Taylor was the first to approach management and the organisational issue scientifically. According to Taylor, by analysing an organisation and its ways of working, breaking down processes, applying hierarchy and rewards, the ideal organisation could be built. There is no doubt that Taylor had nothing but good intentions with this approach. An approach, by the way, that can be traced back entirely to the principles of thinking as presented to us by the Enlightenment. An analysable world that behaves according to relatively simple (mathematical) formulas and which, when handled correctly, turns out to be manageable.

This deterministic one might also say technocratic view of management and organisations is in many cases still the dominant perspective and thus also the perspective from which organisational change is generally looked at. Roughly and slightly exaggerated, that way of thinking in the case of organisational change looks like this: we have a (technical) model of the organisation (functions, hierarchy, reporting lines, division of labour, performance meeting, remuneration and supporting systems). That model has its shortcomings (of course, it is only a model – an abstraction of complex reality). We have been overtaken by time and need a new model.

That model is designed on the drawing board. Often by a designated staff department (after all, they are meant to think, often thinking for others). That staff brings in a consultant because change is a complex matter you need smart heads. At some point, the new “better” model emerges. It is worked out in detail. And it is finally approved at board level. Those affected are indirectly involved, the staff are “in the lead”. After all, people are employees. Or, in proper English, a human resource. Freely translated, a human resource. Malleable and interchangeable.

The new model has consequences for people and numbers of people and therefore has to go through the Works Council. Once that whole journey has been completed, the new model is announced. In the worst-case scenario, everyone affected is dismissed – the number is usually known before we know exactly who is affected. And people are then allowed to apply for a role in the new model. An assessment is rigged, people apply, or not, and as if it were a manageable project, the change project is implemented. With a clear schedule, tight deadlines, time is money, and an ultimately responsible project manager. As befits a good project and as a good project deserves. Organisational change as a planable project. So much for common practice.

People as people, not as human resources
Contrary to what the management literature would have us believe, neuroscience shows that humans, even as employees, are primarily driven by emotions. Our limbic system rules. Our famous and acclaimed neo-cortex goes in search of rationalisation to match our emotion-driven behaviour. And in that order. In short, we are not Homo Economicus (with human thinking underlying economic and business science), we are Homo Emotionalis. Behaviour driven by emotions. For instance, there are three basic emotions in our limbic system that actually constantly influence how we behave. The strongest of those three emotions is our need for Balance aka, Harmony or Stability, read Safety. Evolutionarily unsurprising. Surely Homo Sapiens must have lacked a dominant need called Safety at some point in its early years of existence. Evolutionarily, there was little left of that Homo Sapiens. But that aside.

In short, we are driven by emotions and the need for Security (Balance, Harmony, Stability) is the strongest of our emotional drives.

But not only are emotions the dominant drives within our brain, our brain is also a creature of habit. It does not like change. It functions on the basis of proven successful routines. And that too is evolutionarily understandable. Because imagine if those early Homo Sapiens would have had to rationally ask themselves at every threat and menace in their early existence what is going on here now. Rethinking and not reacting instantaneously to life-threatening danger. Even then, evolutionarily speaking, little would have remained of that Homo Sapiens. So our brains focus on routine, on proven patterns. They are “designed” for that. To deviate from it is incredibly difficult and takes mountains of energy. Learning something new is incredibly difficult for our routine brain. It resists it, constantly wanting to fall back on proven routines, and here again the need for Security is the explanation. That routine has proven itself and is therefore safe.

In short, we are driven by emotions[i] and have understandably great difficulty with change[ii].

The mismatch
It will not have escaped your notice on two fundamental dimensions there exists a profound mismatch between the prevailing approach to change processes and the way the human being, who has a role in those change processes, functions. Let me explain them both.

Safety is taken away
Within the mainstream approach, we deprive the human being, the employee of his or her Safety in two ways. First, we change his or her context, job, function, relationships and everything else that work stands for and then we often deprive that employee of his or her job security as well. Not only do we expect them to adapt to a new organisational model that someone else has devised for them, we expect them to do so without any security regarding their future position. If our limbic system cannot cope with that, we call it resistance for convenience’s sake.

Handhold is taken away
In addition, within the mainstream, we expect people to adapt quickly and easily. Quickly and easily develop a new routine. We organise roadshows, explain the new strategy, explain the new organisational model and why this is the better model. We do some follow-up, but as a rule, it should then be understood and applied in practice. However, that’s not how it works within a routine brain. A routine brain needs time because learning a new routine is time-consuming and relapse is easier than developing a new routine. We also know this from change case histories: usually, after not too long, everything is back to business as usual.  Are old patterns still in operation. We all know that video on youtube of Dustin. The guy who wants to learn to ride a bike that steers the wrong way. Steering left is going right. It doesn’t work, even with sufficient explanation (and it’s not that difficult). It simply doesn’t work. His brain would be set up for the complex routine that is “normal” cycling, that it simply cannot get it done. In the end, it takes him eight months to learn to ride that new bike.

In short, the common change approach is at odds with the two core characteristics of our brain: our need for Safety and our penchant for Routine.

Changing dynamically
The mechanistic change perspective departs from manufacturability and the realisation of an ideal solution. That ideal solution often has a primarily technical character (structure, functions, head counts, reporting lines, technical tools) In that perspective, Change becomes nothing more than the project-based introduction of a new ideal model in which the change approach consists of project management, the realisation of technical solutions within a tight time schedule and budget. And “must” is actually the guiding verb. People “have to” change. They “have to go along” and not wanting to go along is called resistance. The conflict between this approach and two fundamental characteristics of how our brains work and what our brains are looking for has been hinted at in the previous section.

But, what then is the alternative perspective? What should be the starting point of an alternative perspective on change?

An alternative perspective, call it dynamic perspective starts from the human being. Accepts that human being as human and does not approach her as Homo Economicus, Homo Rationalis and Human Resource. The dynamic perspective departs from the realisation that that human being does want to change, but that this is only possible if the change approach fits in with a few essential characteristics of that human being: his and her fundamental drive Security and the routine nature of our brain.

An alternative, dynamic view departs from the insight that technocratic project-based change under time pressure violates our primal need for Safety (Harmony, Balance, Stability) and that our brain finds it very difficult to unlearn learned routines or to replace them with new routines (ways of working).

That starting point leads to a fundamentally different perspective on change. Actually, the dynamic perspective is not based on change but on development. This development involves a number of core characteristics

People in a central role
Andre Wierdsma, Professor Emeritus of Organising and Co-creating, once said: “Contact before Contract”[iii]. He was referring to the need to start with the human dimension in every change process, preferring to speak of development process. “If you can’t make contact you can’t make a contract”. In other words, start with the human being and if human contact exists then it might be possible to talk about a new contract, a new employment relationship, a new job a new boss in a different city in a different office. This is in contrast to technocratic project-based change management in which the contract, as in the new technocratic interpretation of work and work relationship is the starting point of change.

Making contact can be done in many ways and at many levels. Essential aspects involved are organising commitment, creating safety, offering perspective and support and showing respect. But above all, making contact takes time. Time well invested but time we usually do not allow ourselves.

Respect for history
In making contact, in creating safety, respect for history plays an important role. After all, history has brought us where we are today. And unless there is a dramatic business crisis, what we have achieved is usually not that bad. In addition, history is shaped by the collective contribution of each individual employee. Who derives his or her satisfaction, happiness or status from that. You have to respect that history. However, the opposite is usually what happens. To legitimise change, history is labelled inadequate, not as a springboard to something new but as a way forward. As something we have to (forcibly) part with. After all, you will have put your heart and soul into that history for some 20 years. Then you would expect a bit more respect, a bit more appreciation and no rubbish treatment within which you have to see if there is still a place for you. In short, respect for history as the first step towards something new. Something new that never quite breaks free of that history. Organisational development as a common thread with the past. Or in other words, “Respect where you come from, so you can try to get where you are going to.”

Provide direction and guidance
A dynamic perspective thus starts with Attention to People and Respect for History but cannot do without a clear Direction. Attention to the work, the job to be done, the development to be set in motion. Because that Direction offers a grip on content and ensures that, in all the hecticity of change, we work on the right things with the right priorities. In that sense, Direction also offers a form of Security. Knowing where you stand in all the uncertainty and unpredictability that is inherent to change and development are connected. Especially in today’s turbulent markets.

That Direction offers substantive perspective, puts things in context and reflects the level of ambition. After all, people want to work on things that matter and have a place, make a contribution because they are a logical part of a bigger picture. Because in addition to Safety, Stimulus (being challenged) and Dominance (being successful) are important drivers within our limbic system.

Step-by-step development
The best school for successful development is practical learning. Development happens step by step and not with a theoretical big bang. Find direction, take first steps, learn and adjust. Grow into something new that way. Develop as a journey of discovery and not as a ten-day organised holiday with a travel company. Unlike the technocratic project-based approach to change in which we go from IST to SOLL in one fell swoop, incremental development is often much more effective in achieving change. A well-known mantra from the development literature therefore reads, “Don’t think your way into new acting, act your way into new thinking”[iv].

The role of Leadership in dynamic organisational development
Too often, in line with the Taylorist view of organising, we approach leadership as a position. And the position of leadership is always “up there”. At the top of the organisation, in the apex of power. But in a dynamic perspective, leadership is rather an attitude, a stance and an appropriate style. That form of leadership has an eye for people, offers space, involves but also provides direction and grip. That form of Leadership shows humanity, realism and drive. Has warmth and accountability. It has ambition and an eye for the individual. That form of leadership is not limited to a position but can be shown and brought in by any team member. However, if that form of leadership is lacking at the top, if those who ultimately bear formal responsibility for the ups and downs of the organisation (and not just the returns for the shareholder), if they approach change as a technocratic project and see leadership as the power to proclaim things, then little will come of development, let alone real change.

[i] Think Limbic, Dr. Hans-Georg Håusel, 5de edition, 2014
[ii] Thinking Fast and Slow, Prof. Daniel Kahneman, 2012
[iii] Augustus 9th,2022, Harmelen
[iv] A word of thanks to my former colleagues at Nyenrode EMDC