Leadership - Jo Can Do

a smartphone next to an old fashioned phone

Although people are living longer, it seems companies are not doing so well. The Boston Consultancy Group reported that the life span of corporations nearly halved over just three decades. And research from Yale shows that the average lifespan of an S&P 500 company has decreased from 67 years in the 1920s to just 15 years in 2012.

We’ve all seen companies disappear in our lifetimes – remember Woolworths and Blockbuster video? Kodak?

Several authors have observed that it is often a company’s success that sets it up for failure. Managers rely too heavily on doing the same thing that made the company successful in the first place. The success is then used as evidence that they should continue with the same strategy.

Nadler and Shaw (1995, cited in Hayes (2014)) observed that this complacency can be the company’s downfall. As the company grows and becomes more complex, the focus switches away from the external environment and instead to internal issues. This leads to declining performance in the market. But managers think the solution is to do more of the thing which has led to success in the past. As the environment has changed, this doesn’t have the success they expect. Nadler and Shaw describe the organisation as becoming ‘learning disabled’.

Unless the company changes, it can go into the ‘death spiral’:

diagram representing death spiral — Diagram taken from Hayes (2014) page 73

So it is incredibly important to be aware of what’s happening in the environment and to be willing to adapt and innovate for a successful future.

It’s not just companies. We can think of this happening at the individual level too. For example, we get promoted but keep working in the same way we did before. We don’t adapt to the role and learn the new skills required. We double down, working harder and harder with the same strategy that made us successful before. Eventually, if we don’t learn and adapt, we fail. In the words of Marshall Goldsmith’s book – what got you here won’t get you there.

Past success doesn’t necessarily mean future success. We all need to continuously learn, adapt and grow.

References

Hayes (2014) The Theory and Practice of Change Management, Basingstoke: Palgrave Macmillan, 4^th ed.

Our brain is trying to protect us and it likes to be able to predict things. If it can predict what will happen, it can help us avoid harm.

Being able to predict things is also efficient – we can make decisions quicker without having to think every situation through. We can do things on autopilot and save mental energy.

In times of uncertainty, our brains cannot predict what will happen and we feel uncomfortable. Our brain uses energy trying to go through all the possible futures there may be. The Covid19 pandemic has raised the threat/stress levels for most people, not just because of the real physical dangers, but because of the uncertainty it brings. Will I still have a job next month? Can I survive financially? When can things get back to normal?

Studies have shown we feel better having a certain negative future than an uncertain one. For example, a study by Wiggins et al (1992) showed that people with parents who had Huntingdon’s disease, and who therefore might have inherited it themselves, were better off having the test and finding out for sure, one way or the other, rather than live with the uncertainty of not knowing.

And this is one of the main reasons organisational change can be so threatening. When a change is announced our expected future is disrupted, our brains become unable to predict, and this sends us into the threat response. In times of change you need people to be working at their best, making good decisions and finding the best way forward, but the threat response means their minds are distracted and their thinking is impaired. Scarlett (2019) describes it like this:

“The adult brain in a threat response is much like that of a teenager – quick to get angry and emotional, hard to reason with. So an organization going through change is like an organization being run by a group of teenagers.”

Organisations can counter this by creating as much certainty as possible. Give a clear timeline for what you’re planning to do and when, for example, and stick to it. And make the process quick, to lessen the time people are in this uncertain state.

So if you’re a leader, be empathetic to the problems uncertainty causes for the human brain and do what you can do to create more certainty for those around you.

References

Scarlett, H. (2019) Neuroscience for Organizational Change: An Evidence based Practical Guide to Managing Change, 2^nd ed., London: Kogan Page Ltd

Wiggins, S et al (1992) “The psychological consequence of predictive testing for Huntington’s disease”, New England Journal of Medicine, 327 (20), pp 1401–05

Category: Leadership

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