In a world as dynamic as today’s, the ability to adapt quickly to the environment is an increasingly relevant competency for companies. However, some larger, more traditional companies struggle to implement rapid changes, which involve more than just gradual improvement. Going beyond continuous improvement and making radical changes, such as rethinking strategy, adding/removing business lines, and changing organizational structure and culture, seems to be a bigger challenge. 

We have experienced instances of long efforts with high dedication of resources in planning major changes, which end without implementation or very close to the starting situation. Various studies reflect this reality, for example, John Kotter in “Leading Change” indicates that more than 70% of change initiatives fail, Gartner points out that between 55% and 75% of ERP implementations fail, and a study by the Project Management Institute (PMI) suggests that 44% of strategic transformations fail. 

As a result, companies may lose their dominant and/or profitable positions in the market due to their inability to adapt. Moreover, many times they do not adapt despite identifying opportunities and recognizing the urgency of change. For example, Clayton Christensen in his classic book “The Innovator’s Dilemma” highlights the case of hard disks where in every major market disruption—driven by the reduction in the diameter of disks and thus the introduction of smaller computers, from mainframes to notebooks—the dominant player, despite having the capacity and lab prototypes, was unable to maintain its position in the new markets due to the inertia of its processes and culture. 

Why does this happen? In our experience, the pressure for short-term results and budget compliance pushes companies to execute established processes and expect good results from them, neglecting the responsibility to try different things beyond continuous improvement. As a consequence, teams live day by day or month by month, focusing on what they are asked to do and focused on avoiding mistakes. This reinforces the valuation of past successes and makes risk-taking and decision-making more costly. 

To address this situation, an alternative that more traditional organizations can follow is to foster learning cultures, based on the management of pilots and experiments, in which members of the organization act as curious “scientists” to validate or reject hypotheses about how they can do things differently to achieve better results – reinforcing the capacity of the “inquisitive” or natural inquirer, in a controlled environment. We consider, from recent experience, that it requires developing three fundamental aspects: 

• Generate safe spaces where teams can propose ideas that question the traditional way of doing things and have the confidence to test them 
• Establish accountability for idea exploration processes. Experimentation should be structured based on hypotheses and the definition of success/failure parameters that allow measuring results to ensure learning from each experiment 
• Set aside “intuition” and phrases like “we have always done things this way”, “this is the best practice”, “from my experience I believe it is so” to justify one option over another 

Successful companies like Amazon have incorporated this methodology into their DNA, as reflected in the words of its founder and CEO Jeff Bezos: “our success is a function of how many experiments we do per year, month and day”. With this methodology, Amazon conducts more than 10,000 annual experiments to define the content of its mailings, format and size of promotions, webpage layout, among others. In addition to the above, Amazon has developed a particular decision-making process, designed to strengthen accountability over processes. This consists of teams generating 6-page memos for each relevant decision, describing the customer’s problem and a set of potential solutions explaining how they would help the customer. This obligation to get to the heart of each problem and solution in turn forces the organization to show the essence of its proposal, and decision-makers to better define which path to follow. 

We have seen and experienced with some of our clients how entire areas or companies are transformed when they push practices of this style. For example, with one client we conducted pilots in their automotive dealerships, to experiment with both the car sales process and technical service. In this case, we tested various changes: adjusting discount approval methodologies, changing the distribution of cars inside the store, facilitating and enhancing the use of test-drives, changing the tele sales protocol, modifying the workshop flow, incorporating confirmation calls for customer visits, among others. Because of the visible results of the changes, the company quickly implemented them and strongly increased its results and customer perception. At the same time, teams were empowered and motivated to add greater value by questioning their work. In the same way, we invite you to push your curiosity and that of your teams to question your day-to-day and the established practices of your organization. 

Publication prepared by Martin Larsen, Project Leader 

Sources: 

Think Again – Adam Grant (2021) 

The High Cost of Low Performance – Project Management Institute (2014) 

ERP Implementation – Gartner Research (2010) 

The Innovators Dilemma – Clayton Christensen (1997) 

Leading Change – John Kotter (1996)