Changing How We Think About Change

A major challenge for business leaders is knowing when to stay the course and when to change direction. There is conflicting advice. Thousands of articles have been published on the topic of change management in leadership, but just as many have focused on the key roles of persistence, grit, and commitment — that is, not changing — in overcoming challenges.

As former U.S. Army Chief of Staff Eric Shinseki famously remarked, “If you dislike change, you’re going to dislike irrelevance even more.” Change may be inevitable, but it can be hard for business leaders to identify the nature, scale, and timing of the change that is appropriate for their company’s specific context. As operating environments become more dynamic, both the benefits and risks of change become amplified.

Just as the word ride can describe both a white-knuckle experience on a rollercoaster and a leisurely excursion on a bicycle, change is used to describe a wide variety of contexts. We assert that a fundamental source of confusion among managers and executives is the use of that single term to refer to three very different strategic responses to business challenges.

Change can involve magnitude, activity, or direction, and the first step toward a clearer vision for change is to clarify what form of change should be considered:

• Magnitude: “We need to enhance our execution of the current path.”
• Activity: “We need to adopt new ways of pursuing the current path.”
• Direction: “We need to take a different path.”

Companies that have doubled down on flawed or outdated business strategies, for example, Kodak, Nokia, Xerox, BlackBerry, Blockbuster, Tower Records, and J.C. Penney are guilty of believing that a change of magnitude was sufficient instead of either a change of activity, such as adopting new technologies or distribution channels, or a change of direction, such as exiting certain businesses altogether.

Contrast these examples with companies whose ambitions led to risky changes in direction when their context called instead for changes of activity or magnitude: GE’s attempts to be a first mover in green energy and the industrial internet of things through Ecomagination and Predix; Sony’s move into entertainment content; or Deutsche Bank’s efforts to become a global investment bank.