ICG - RO

Today, more than ever, leadership means “managing transformations”. Firstly, by continuously changing one’s own organization in such a way that it is successful in the long term. And secondly, by influencing people so that they learn new behavioural patterns in order to meet the demands of the future. Sounds rather mechanistic, but it’s not at all. Organizations are not trivial machines that can be controlled or programmed at the push of a button, and people are not creatures that can be programmed.

So, the question is: How can we succeed in implementing organizational change and promoting individual change in people from the position of a leader? Nothing is more practical than a good theory and some fundamental principles for everyday leadership.

This is exactly what you will find in the following paragraphs, giving you a framework for understanding how organizations and people work, how they learn and how they need to adapt to changes in the environment.

Organizations are complex social systems

Organizations exist to fulfill a purpose for their environment, which system theorists call “the primary task”. In current management practice, this means organizations pursue a purpose. For every organization (company, department, team, etc.), this is about fulfilling a goal that is valued by “customers” and thus also about “ensuring survival”. If this reason for existence is lost or if the organization cannot adapt its purpose quickly enough to new environmental conditions, organizations die or vegetate until they are no longer viable on their own and are taken over. That is why it is so important to define the purpose and to be aware of the real reason for existence.

So far, it sounds simple, but organizations as social systems have another special feature that makes it difficult for them to adapt to necessary environmental developments. Social systems strive for stability and repetition of successful patterns from the past. These patterns provide security and enable efficient action. Sometimes they are not even visible to individuals, but are burned deep into the subconscious (we can also call this organizational DNA).

Since a social system has no clearly predictable cause-effect relationships, organizations, unlike machines, cannot be controlled or programmed by management mechanisms, no matter how sophisticated. New MbO systems, quality management systems, balanced scorecards, agile systems such as LeSS, SaFE or Scrum often promise effects that they cannot maintain in practice, because the mechanisms of a social system cannot be programmed. New management systems are introduced, executed, and yet behavior has not changed.

The key factor in driving organizations out of their stability patterns is irritation from the environment, from the market, and from the competition. These irritations from outside are what change the proven success patterns the most, and they are the fuel to ensure survival. If the paths for perceiving environmental changes are “blocked,” if environmental signals are deliberately not perceived, or if the corresponding “radar systems” are missing, an organization risks that the necessary ongoing adjustments in its behavior will not happen. The examples of organizations that enjoyed the success of the past for too long and then suddenly lost their very reason to exist are well known.

Human behavior is controlled by emotional reactions of the brain

As much as many managers would like, a new employee behavior cannot be produced by an “announcement,” a good explanation, a PowerPoint chart, or a new incentive system.

How we human beings react to behavioral demands expected of us is varied,  expressed individually, and is hardly predictable.

Significant factors influencing human reactions include: experiences with changes in the past (positive, critical), the current psychological state (feeling of happiness, depression, anger, etc.), the assessment of the personal benefit or disadvantage of a change, one’s own personal pattern of reacting to changes, or the assumption about the sender of a change message (do I trust, distrust, is it a “friend or foe”).

All of these change reactions are pre-programmed in our brains due to personal biography and basic physiological processes and, therefore, are not directly accessible to a manager as a “designer” of behavioral change. However, some basic patterns can be derived from brain research to help executives influence behavior.

Humans react to social stress (the requirement for a non-self-defined behavioral change) via the limbic system – the second oldest part of the human brain responsible for our emotions. Social stress, depending on personal pre-programming (experience, dispositions), is mostly perceived as a threat by the limbic system without any intellectual examination of the underlying facts in the brain cerebrum. Emotional reactions such as “fight” or “flight” arise in 1/5 of a second.

According to the SCARF model, which is helpful for managers, there are 5 dimensions that, when perceived as a threat by the person affected by a change, lead to exaggerated social stress responses. These 5 dimensions are: a threat to social status, uncertainty about my future, fear of limiting self-determination, risk of losing social relationships, and fear of being treated unfairly.

Neuroscience provides a second source for understanding the human psyche from its study of the hormones cortisol, oxytocin, dopamine, serotonin, and endorphin.

Social stress, for example, produces cortisol, which prevents the “learning” of new behavior patterns. On the contrary, success or the feeling of having achieved something makes the brain produce dopamine. If I have a feeling of social connection or a sense of security in a well-meaning group, oxytocin is triggered. Dopamine and oxytocin are hormones that create a feeling of happiness and help people to connect nerve cords in the brain, enabling them to learn and anchor new behaviors. Everyone knows of enough situations where the feelings of success and positive team experiences have made new behaviors possible.

Consequences for Leadership Behavior in the Management of Change

As a manager, what do I do with these “theoretical” basics? The best way to use these insights is to shape your leadership actions when observing your environment, when designing frameworks and systems, in communicating with your employees or in decision-making processes.

And, remain humble in your assessment of your effects. Be aware that whatever you do, no matter how well-intentioned, you can never be sure what the response of those around you will be or how individual employees will react to your actions.

Nevertheless, we would like to provide you with 3 basic recommendations for dealing with organizational and individual changes:

Leadership interventions for organizational change

1. Manage feedback from customers, stakeholders, and the environment. The energy for change in complex social systems always comes from the “outside”. External impulses must always trigger an emotional reaction in those who have power and who can determine a direction. The best way to do this is through personal involvement.
2. Try to remove system blockages – Change Management is often comparable to the actions of a chiropractor. Remove blockades, especially where dysfunctional patterns are hindering future success. In most cases, these are structures, rules and regulations, personal power constellations or dominant systems. Distinguish clearly between valuable assets from the past that need special protection and meaningless “debris” of patterns that need to be removed.
3. Find your focus through a meaningful strategy, be it a strong common purpose (what do we want to achieve as an organization or as a team?) or a vision for the future (how do we want to stand in a few years?), in which you map the aspirations of the people in your organization. It should not be something artificially imposed, but something in which the basic energy for an attractive future exists. Because people want to feel that it’s worth getting involved in and what it means to be part of a “big idea”.

Leadership interventions for individual change

When dealing with people in change situations, the key is to perceive them in their individuality. As a manager, while maintaining clarity in your communication, you should avoid pointless social stress situations for employees. The point is to promote further developments through positive reinforcers and, by no means, to lead via fear. It is helpful to do this:

1. Create situations where people produce dopamine in their brains. These are tasks where results can be achieved in a manageable amount of time and where feelings of success and progress arise through repeated action. This progress then needs your positive recognition as a manager to fuel the learning process.
2. Create psychological security for your employees, i.e., experiences where oxytocin can flow in the brain. These are situations where people can get involved without fear and the feeling of community promotes the learning of new behavior patterns in all participants.
3. When communicating with employees in social stress situations, you should always try to act emphatically and avoid threatening the 5 SCARF aspects (Status, Certainty, Autonomy, Relatedness and Fairness) wherever possible. In this way, emotional defensive reactions that cannot be dealt with (fight or flight) can be prevented and learning barriers can be avoided.

In summary: In your actions as a change leader, always take a look at the 6 fields and always reflect on the effect of your own behavior. Because change can only be led by someone who is prepared to develop themself further.