Coaching the CxO
Agile is becoming mainstream and many organizations have made the transition to agile practices. But we also see that the current agile transitions are often not the silver bullet for success that most companies had hoped it would be.
Agile transitions have focused mainly on the team level, implementing practices such as Scrum, Kanban, eXtreme Programming or combinations and variations of these practices. This has certainly improved the teams but in most cases has not changed the rest of the organization resulting in suboptimal solutions.
Unfortunately this has caused many of these organizations to claim that agile “does not work (for us)” and usually revert back to traditional waterfall type approaches.
But the truth is different. The fact that these organizations claim that agile does not work actually means that it did have the effect agile practices usually have. It caused problems to rise to the surface, problems that need to be addressed instead of ignored. It should not be seen as the end of an agile transformation, it is the starting point.
Agile coaches are not unfamiliar in working with management roles such as project managers and team managers to facilitate changes on team level. But now they need to facilitate change on management level, which completely changes the scope of the agile coach.
Introducing change on these levels often results in resistance to these changes. The agile coach now needs a new skillset to be able to sense resistance and learn techniques to overcome resistance to facilitate the change that is needed in the organization.
In this article I will explain a coaching technique that helps the agile coach to understand the context of his / her target audience and formulate a coaching message matching that context.
The ever-changing world
But first of all, why do organizations need to change at all?
The business world is changing rapidly and the rate of change is increasing continuously. The following graph published by the McKinsey Global institute indicates the increasing rate of change.
While it took 38 years to gain 50 million users from the moment radio was available it only took 9 months for twitter to accumulate 50 million users.
Amplifying this graph even further to consumer applications, a game such as Angry Birds only took 35 days to achieve the 50 million users landmark.
Of course these figures are just examples, but it is a clear indication that organizations need to be able to respond to change at an increasing frequency.
Jack Welch (CEO of General Electric for 20 years) once stated:
“If the rate of change on the outside exceeds the rate of change on the inside, the end is near.”
To be able to keep up with these changes in the market it is no longer sufficient to change the organization in the traditional way. Using reorganizations to restructure the organization to be able to adapt to the changed environment will simply be too slow. By the time the reorganization is in place the market will have changed again.
If you want to be able to respond to market changes, or better yet, anticipate on them, change can no longer be treated as a single event but should be an ever-ongoing process within your organization.
An organization needs to continuously learn from itself, the market and the competitors to adapt the organization and their strategy. Changing an organization in an agile organization, implementing agile practices on all levels, will help you achieve this.
Change management on all levels
Now this is an ambitious goal, changing an organization into a truly adaptive organization. In most cases especially in larger organizations certain structures (and people) have been in place for decades.
Agile coaches have been acting as change managers on the team level, mostly just focusing on the development teams of the IT departments, and sometimes being allowed to extend our span to the operations department as we see happening in the more recent DevOps movement.
But now we need the organization to become an agile organization and to do this we need to facilitate change at all levels of the organization.
For this article I will leave the team level changes for what they are and will only focus on the higher levels in the hierarchy of the organization.
Introducing changes on management levels in the organization requires a different approach from the agile coach.
Most agile coaches have experience in facilitating change on the team level, which has been their focus area ever since the introduction of agile. During these change processes the agile coach has interacted with management level, but mostly to get support for the changes on the team level.
However introducing changes on management levels in the organization suddenly makes these managers the people to whom changes get introduced in their way of working.
Now this is not new to agile coaches and several of us have tried to accomplish this. Unfortunately in most situations coaches have encountered a high resistance at these levels in the organization.
People’s first response to a change is quite often resistance to the change and when people at management level resist a change they use their authority to reject that change.
If the agile coach can’t succeed to overcome this resistance he won’t be able to facilitate the changes that the organization needs.
Resistance to change
To be able to overcome resistance when we are introducing change, we first need to understand why resistance occurs to an extend that prevents any suggestion for change from being accepted. To understand this behavior we need to take a look at some basic knowledge of the human brain.
There are basically two decision-making parts in the brain, one being the prefrontal cortex and the second one being the limbic system with the amygdala in particular.
The prefrontal cortex is located as a thin shell covering the front part of the brain just behind your forehead.
This part of the brain is responsible for innovative thinking, insights, reasoning and decision-making. This is the part that we want active in a person when we are trying to introduce a change.
The second decision maker in our brain is in our limbic system at the center of the brain.
The limbic system contains the amygdala, which is an area in the brain that is involved in emotional processes.
Emotional distress such as anger and fear triggers the amygdala. This is our survival mechanism.
If you would be walking in the forest and suddenly have a growling bear in front of you, your response is quite simple. Your heart rate will go up, your anxiety level raises and you make a split second decision to fight the bear, run from the bear or freeze on the spot. Since the bear can be quite deadly your limbic system quickly decides that running probably has the highest survival chance so you run for your life.
While this instinctive response is in some cases beneficial, it also has a downside. When the amygdala kicks in it literally hijacks the brain and impairs the prefrontal cortex, stopping all it’s functions and therefore stopping us from thinking and reasoning.
Change as a threat
Let’s look at this in a change management perspective and how this compares to the reaction a middle manager or CxO has when you, the agile coach, is introducing change?
To most managers, regardless of the level, change is considered a threat. This is particularly the case when changes imply that their own role will change, which is quite often the case for managers in agile transformations.
The human brain responds to this threat in the same way as when you would encounter the growling bear. To the brain, a threat is a threat no matter if it is a life-threatening situation or if someone feels threatened in his or her organizational position.
The threat of the change that is being introduced will trigger the amygdala, which in its turn will hijack the brain and impairs the prefrontal cortex. The manager to which the change is introduced will now act out of instinct and will protect himself. Resisting the change will feel like the safest solution so that’s what he or she will do.
Even in the previously illustrated bear scenario this causes a problem. The limbic system will cause us to run based on the threat that is perceived. But if we would be able to think we would reason that a bear runs much faster than a human, ruling out running as a survival option. Knowing that bears are initially frightened when they encounter a human by surprise, producing a lot of noise and waving frantically might be the better option. However our limbic systems stops us from making these conclusions. Maybe the experienced wildlife coach will have it wired in his system to react in the proper way but the average tourist will probably try to run for his life.
Agile transformations will introduce changes, changes will trigger resistance and if this resistance blocks the change from being implemented the organization wide implementation of agile will come to a halt unless we can overcome that resistance.
To facilitate change within an organization we need to find a way to overcome resistance.
As mentioned, resistance is triggered when people feel threatened. In almost all cases this threat is based on emotions. Regardless if there is an actual threat, the person experiencing these feelings will perceive it as an actual threat. In most cases they worry about losing their position, power, status and maybe even their job.
If people resist change due to emotional reactions then we can assume the key is to understand these emotions and target positive emotions to reduce fear and let people perceive the suggested change as an opportunity for innovation instead of a threat. Ultimately this will allow the agile coach to facilitate the change that is needed.
This sounds easy but is in reality a lot harder and there is not a single solution that works in all situations. We are still dealing with people and emotions, which means that each person and each situation is different and requires a different approach.
There are however a number of guidelines that can be used to help you, which I will discuss in the remainder of this article.
Step 1: set the stage
Don’t just barge into the CxO’s office and tell him that you have the solution for all his problems in the company. Do your homework and understand their situation and point of view. They might not even be aware of the problems that you are encountering, let alone be ready to talk about solutions for it.
A good preparation step is to draw an empathy map of the person you are trying to convince.
Empathy maps help you identify the things that a person hears, sees, says & does. This will help you understand what this person thinks and feels and ultimately what his or her pains and gains are. Which is highly useful when trying to find out what could be the convincing factors for a person to accept a change.
Use the “image” you have created when drawing up the empathy map in your discussion with the person, verify your empathy map and adjust it where needed to get a full understanding of the person.
See the Innovation Games® website for more information on how to create empathy maps.
Step 2: Expect resistance
Even though you think that your idea is the best solution, there will be resistance. The scenario where you deliver a pitch of your idea during your short moment with the CEO in the elevator, the CEO instantly accepts it, puts the entire company on it and rewards you with endless praise for it, is highly unlikely.
Expect that your ideas will be received with skepticism and that the initial response will be to resist the change. Being prepared for this will allow you to respond to it.
The best way to be prepared to this resistance is to be in control of your own stress level. Being a change agent and having to deal with skepticism, fear and having every step questioned can have a negative impact on your own stress level.
Try to keep your own stress level as low as possible and make sure you don’t have any personal stake in the change you are trying to introduce. Not having a personal stake will leave your own emotions out and will allow you to focus on the response and emotions of the person to which you are trying to introduce the change.
Step 3: Use positive emotions to influence toward your change
Positive emotions are the key to change management. One way to use positive emotions to help you convince people is to use influencers. There have been numerous of books written on how to work with these emotions to influence people. Most of them come down to a few basic influencing techniques:
- Consistency & Commitment
- Social Proof
These influencers are described in Robert B. Cialdini’s book “Influence”. I will give a short description of each influencer.
When you are introducing a change at any level of the organization, be prepared that the person in front of you will think “What’s in it for me?”. When trying to change something in an organization you are asking management for support, effort and possibly an investment. They want to know upfront what is in it for them.
Research the subject beforehand. Try to find out the gain that he or she would want to have in return for what you want him or her to give support, effort and investment to.
People are sensitive to missing out on things. Make clear what people miss out on when they are not committing to the change you are suggesting.
Don’t overdo it by claiming that the company needs to change now or else it will go down in flames. In agile transformations the best way to use this influencer is to quantify the losses the company takes as long as your suggested change is not put into place. Quantifying the losses works best if you talk in numbers that interest them such as:
- Revenue loss.
- Cost increase vs stable or decreasing revenue.
- Contract number losses.
- Employee turnover.
Know what you are talking about. Make sure that there are no loose ends in your story. If you want to have any chance of getting people to accept the change that you are suggesting, people need to be able to trust your authority on the subject.
Be knowledgeable on the subject, be able to answer the questions and respond to concerns. Additionally it helps if you are accredited on the subject, for example by certifications that you may hold, published articles, books, past experience. And if you don’t hold authority yourself (there is only so much you can be good at), find someone who does and ask their help.
Consistency & Commitment
People have the tendency to stay consistent to previous commitments. If you can explain how the change you are suggesting will help the manager to fulfill an earlier commitment that he has made he will at least be interested in what you have to tell.
For example if a manager has committed himself to stand for the quality of the organization’s services or products. Linking your suggested change to an improvement in quality and mentioning that you know how important that is for the company will increase the openness to the change you are introducing.
Who would the CEO listen to; someone dressed like him or the techie in a hoodie and sneakers. Although this might seem like a bold statement, it is how it works. People listen to people that are similar to them in looks, lifestyle, hobbies, etc.
When you are working with multiple coaches together in an agile transformation within an organization decide with each other whom to bring to the table. Choose the person with the most “connections” to the person that you are proposing the change to.
Now how can you use this to your advantage when introducing change? First of all moderation is key. Don’t dress up in your wedding suit to impress the CEO, it will be unnatural and you will feel uncomfortable. Stay close to yourself to stay comfortable and trustworthy. But do consider what to wear for important business meetings. It might make the difference between getting to the table and getting directed to the door immediately.
But what if the CEO and you don’t have any related interests or hobbies? Look at his circle of trust. Who are the people that do have a connection with him and are there people in there that might be willing to support your idea towards the CEO?
Examples always work, if it has worked for others, why wouldn’t it work for us? Examples of success stories can be very effective convincers. Use storytelling to convey the story. Just listing facts won’t stick for long. Telling an actual story to which people can relate themselves will make it easier for people to remember it.
But beware don’t use a random example; use examples that people can relate to. For example don’t use Google or Facebook as an example if you are trying to convince a big airline to move to agile. The response will simply be: “We are not Google”. In this specific situation referring to Southwest Airlines would probably be a better example.
Step 4: Know when to back off
You cannot prevent running into situations in which your suggested change is still resisted by someone. In this situation it is very important to know when to back off.
It is very important to realize that positive emotions will make a person move toward the suggested change, but the slightest negative emotion related to a suggested change will cause the person to flee.
When you encounter resistance try not to make the common mistake to go into debate with the person that is resisting your suggestion. Take a step back, acknowledge that you understand his or her concerns close the discussion for now and agree to the approach on how to get back to this discussion at a later stage.
Analyze the discussion and the resistance that occurred and take your learning from it. Try to understand the concerns the person is having and try to use the influencer patterns to get your story to the person.
Putting it all into practice
Setting the stage, preparing yourself for encountering resistance and the influencers are on it’s self not the solution. Combining them together makes them stronger. Understanding the person you will be talking to will allow you to create the scenario that will give you the highest chance of successfully getting your change accepted. It could be that you only need one of the influencers or maybe you will need to use a combination of several influencers.
Take for example a Chief Financial Officer (CFO). First you need to understand their frame of reference. An important piece of information is which cost accounting approach they use.
A lot of companies still use standardized cost-accounting which is traditionally built on the philosophy of scalable efficiency and squeezing out costs, particularly labor costs (which used to be the largest part of the production costs). As a result of this conceptual framework oriented towards reducing labor costs we find organizations focused on cutting costs, often through downsizing and outsourcing, and suffering from lack of innovation, unhappy customers and disengaged employees.
The challenge is to get a cost accountant to start thinking beyond cost reduction and focus on generating new value to customers. There are cost accounting approaches that support this such as Throughput Accounting or Beyond Budgeting, which is a management accounting technique used as the performance measure in the Theory of Constraints (TOC). It is the business intelligence used for maximizing profits. Unlike cost accounting that primarily focuses on 'cutting costs' and reducing expenses to make a profit, Throughput Accounting primarily focuses on generating more throughput.
So a CFO that works with throughput accounting already understands the focus Agile has on generating value, which makes it a lot easier to find common ground.
But a CFO who’s frame of reference is standardized cost-accounting could be a much more difficult conversation partner.
Of-course talking about reducing risk will work with even the most traditional of cost accountants. John Goodsen suggests drawing a Return on Investment (ROI) graph comparing Agile and Waterfall. Even a cost accountant is likely to see the risks in spending more and more with no interim return. And unless the environment is totally static, and the work totally predictable, the impact of a delay or a technical glitch occurring is huge. With so much invested without any return, any delay is disastrous.
Trond Wingard suggests to talk to a CFO in the language they best understand, which is “numbers”. He provides a calculation spreadsheet showing that frequent releases can improve project economics and ROI (return on investment). It shows the impact of releases and prioritizing functionality for value on the NPV (net present value), IRR (internal rate of return), payback period and ROI (return on investment).
Steve Denning is a huge advocate of using storytelling, because even though cost accounting is about numbers, the reality is that human beings make decisions based on stories. The more you know about the story the CFO imagines himself living, the greater the chance of implanting a new story that will change behavior. So choose a success story that draws on the value system of the CFO in order to connect.
Using some of the other influencers you could also think about contacting CFO’s that have already implemented throughput accounting, lean accounting or beyond budgeting and organizing a round table discussion. This also works great for CEO’s, CIO’s as it provides them with peers that provide authority, liking and social proof all the while helping them gain insight into their organizational challenges (and helping them find ways to overcome them).
The business world is changing at lightning speed and the rate of change is continuously increasing. To survive and to thrive in this new world, organizations will need to respond to changes faster and more adequate.
To achieve this, organizations need to adapt a continuous evaluation and change process and become a self-learning and adaptable organization.
Coaches trying to facilitate this change within organization often run into a resistance to change when introducing changes on the management levels in an organization. Change is often perceived as a threat, triggering negative emotions that cause people to resist the change.
If you want to succeed in coaching on this level you need to be able to understand the goals and objectives but just as well the concerns and emotions of your new target audience and use this understanding to target positive emotions to facilitate change.
The contents of this article resemble the presentation on this topic by Astrid Claessen and Joost Mulders at the XP Days Benelux 2013. The PowerPoint presentation can be downloaded here:
The following books and articles were used for the research of this article:
- Your brain at work, David Rock.
- Quiet Leadership, David Rock.
- The brain and emotional intelligence, Daniel Coleman.
- Influence, Robert B. Cialdini.
- How Do You Explain Radical Management (Or Agile) To A CFO?, Steve Denning
- CFO’s Case for Frequent Releases, Trond Wingård
The following sketch note video summarizes the influencers that are mentioned in this article and are referenced in the book Influence from Robert B. Cialdini.
About the author
Joost Mulders is a partner and one of the founders of Kuzidi, based in The Netherlands. He has extensive experience in a large variety of roles on all levels in IT organizations from developer to management team member. Combining this experience with knowledge from neuroscience and psychology he coaches people, teams and organizations in agile transformations.
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