June 26th 2019

CRFCast – HR Insights from the Corporate Research Forum: Leading Transformation with Kyle Nel

Discussing Kyle’s book, Leading Transformation: How to Take Charge of Your Company’s Future, we discuss why so so few organisation transformation efforts are successful, and how we can increase the odds of achieving desired results. We explore some novel methods for stimulating and sustaining behaviour change, for example using brain scanners to measure customer reactions, or telling the story of the anticipated future state through science fiction.

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Episode Transcript

Gillian Pillans [00:00:03] You're listening to the CRFcast where we explore research we've been working on here at the Corporate Research Forum and we discuss the latest thinking and strategic HR topics with academics, practitioners and leading experts in the field. I'm Gillian Pillans, research director at CRF. You can explore the full podcast archive and subscribe for updates by searching CRF cast on iTunes or Spotify. You can also find more about CRF and access all our podcasts and other research materials at www.crforum.co.uk.

[00:00:48] My guest on today's CRF cast is Kyle Nel, author of Leading Transformation How to Take Charge of Your Company's Future. Transformation is a word we hear a lot these days, but the reality is that it's only a small proportion of transformation efforts that can actually be described as having achieved their objectives.

[00:01:06] Kyle and I discuss why the success rate of chief programs is painfully low. What we can do to increase the odds of achieving successful transformation and some novel approaches that Kyle has used to get stakeholders bought into change efforts to achieve sustainable behaviour change.

[00:01:24] So, Kyle, thanks for joining us. Great to have you with us.

Kyle Nel [00:01:26] Thank you.

Gillian Pillans [00:01:27] Great. So let's get started. Let's talk a little bit about the book. And I just wonder if you can summarise the key messages from from your book.

Kyle Nel [00:01:37] Yeah. Leading transformation is all about that. Like, how do you how to big organizations and small ones really transform in an intentional way? And we're not talking about huge what we call in the book big T transformations all the time, but the small micro T transformations that either lead towards where you want to go for or keep you from getting to where you say you want to be.

Gillian Pillans [00:02:00] Okay and this word transformation is kind of interesting. And it's a little bit of an overused word these days, a bit like digital. And they they quite often go together as well. So can you explain exactly what you mean by transformation then?

Kyle Nel [00:02:13] Yes. It's it is a loaded and overused word when I mean transformation, I specifically, like I said before, it's really bifurcating into two things. So people think of transformation. That is big end state scenario. Well, that's good. But there are little transformations that need to take place in whatever sphere of the organisation in order to achieve that. And so this book is about breaking out those two and then giving real tools for how to do it.

Gillian Pillans [00:02:38] Okay. Because I think we all read the stats about some difficult changes in the high rates of failure of of change programs and transformations. So. And I understand you've done quite a lot of research into what happens in Fortune 500 companies and perhaps some of the reasons behind why these things don't work. What does that taught to you in terms of what you've seen happening across across different organisations?

Kyle Nel [00:03:04] Yes, OK. The where it's where it works and where it doesn't falls on basically three core principles. And even when it begins to work, if an organisation ceases to do one of these three things, it falls apart. So these three things seem to be the ways that any organisation can continue to to develop it. And those three things are, one, having that strategic narrative, which we I'm sure we'll talk about later. And then the other is having a real system for breaking bottlenecks inside the organisation, not usurping the organisation, but breaking finding ways to break through the system so you can actually get change to happen. And then lastly, you need to have new KPI is what we call future KPI, as are measures of success to be able to understand what's working and not working so you can make investment and and other kinds of decisions. If any of those three things are missing, innovation, transformation will not happen.

Gillian Pillans [00:03:58] Okay, so let's sort of dig a little bit under the surface and your book is built around the model of those three different pieces working together. So let's start with a strategic narrative. First of all. So what is the strategic narrative and how do you go about building one?

Kyle Nel [00:04:14] So I'm a big Joseph Campbell fan. Campbellite, one might say, for those that haven't read Joseph Campbell, read Joseph Campbell.

Gillian Pillans [00:04:22] Okay. And what I can say as well as we did a big piece of research on storytelling a couple of years ago, and there's lots in there about Joseph Campbell and about the seven classic stories that underpin all storytelling throughout history. So, further information on our website.

Kyle Nel [00:04:37] Those of you listening on your phone or at home won't see the joy on my face after hearing that. But yeah. Joseph Campbell is so important and I'm so shocked to hear how many business leaders have not read, Campbell, because they're the underpinnings of who we are as people. And it's the most shared universal thing. So when I was an academic, a frustrated one at that, I was studying how people make decisions. And what I found was the only real way that people ingest new information and then do something with it. That's the most important part. Doing something with it is through stories. And so when I got into the business world, I was really surprised at what people were calling stories. They were calling stories, basically contiguous ideas and power points. That's not a story, a story to go back to. Joseph Campbell has said characters conflict in a narrative arc. If it doesn't have those things, it's not a story. And we are wired to love and receive stories. People are wired for that. So we should use the tools to which we're naturally predisposed. So to make a long story short, what we do is every organization has a narrative. When you start your first day at the new job, what do they do? They sit you down and do the indoctrination session and they hand you the white binder. I don't know why it's always a white binder. And in that at the beginning is the origin story of your organisation. Someone or someone's had some idea, overcame some challenges and boom, here's your company. What they usually don't do is tell you how well you've done in the past, where you are right now and where the company is going in the future. That where the company is going in the future is incredibly important. So what we do is we hire science fiction writers, give them all of our marketing research and trade data. And we did this at Lowe's and we don't have many, many other places. And then we write real stories with characters, conflicts in a narrative arc and turn those into a short story.

[00:06:23] He's usually in the form of a comic book or graphic novel, and we'll pass that out to senior executives at the company instead of doing a PowerPoint. That's the story.

Gillian Pillans [00:06:32] So why science fiction and comic books rather than any other sort of approach to storytelling?

Kyle Nel [00:06:38] So you great, great storytelling is great across the board. But what we found what I found is that science fiction is the best in the in this sense for figuring out the future. What is science fiction? It's a probable, possible combination of tech and people trends colliding at a certain point of time in a geography always. Usually they can be dystopian, utopian, what have you. But those writers are really skilled at sifting through all that stuff and figuring out how that might actually play out in the world. Well, what are we all trying to figure out as business leaders? We're trying to figure out how tech and people trends will collide at a certain place and time in the future. And so they're uniquely qualified also to they're good at sitting as a third party to kind of oversee all the things we think we know and to really see how what could be important and not important. And that's why using science fiction writers is so critical. It's a skill. They are so good at it. I mean, think of all the things that Arthur C. Clarke predicted and you think about all the Isaac Asimov and you go through all of these amazing writers. They predict a lot of what we have now. You know, some of the best business writers were science fiction writers back in the 40s, 50s and 60s. We should've been paying attention that more.

Gillian Pillans [00:07:45] And how does that go down in organisations in your experience? Then?

Kyle Nel [00:07:49] I'll tell you exactly how it always goes down. There is somebody or somebodies in the senior executive team that are frustrated with the traditional consulting path. They recognize their organisation needs to change. And so they go look for something bizarre and then they find me usually and they will champion it. They will somehow get consensus ish in the organisation that they're going to do this thing. I'll come in after doing the process. And the executive team when I had pass out the complex, will laugh every single time they will giggle and laugh three or four pages into that comic book. No one's laughing anymore because they then see that if they don't aren't a part of this future, then they're then their businesses in material trouble. And then it also provides an opportunity to go well, we could be leaders in this instead of just wringing our hands and waiting for the end to come. And so it shifts from a giggly kind of situation where this is funny and silly to, oh, my gosh, there's so much opportunity here. Oh, my gosh, we can actually do this. It's a very different conversation that if I was trying to convince an executive the usual way, the MBA, way through facts and figures, I'm going to rationally beat you down to my point of view and someone might agree with you. But will they actually take that that idea or those facts and turn them into behaviour? Very little. I mean, how many times have you been in a meeting where someone had all the rational thoughts from the other and everyone goes, great presentation and then no one did anything with it. And so it's good using that story to get above that.

Gillian Pillans [00:09:16] Or even when we talk about diets, you know, some they never work because some behaviour change isn't sustained over the long term. So exactly the same principle.

Kyle Nel [00:09:23] But no one would disagree that we need to eat better and exercise more. Right. The other part of it is what it does is it provides. This is also the antithesis of a traditional large organisation that provides a lot of clarity with very little certainty. And organisations like to provide a lot of certainty with very little clarity. We know that we're doing steps 1 through thousand. I'm not exactly sure why, but we're doing it and we're executing on that. This is the complete opposite where it's here's the future we're trying to build towards. I have no idea how I can get there. Then the next step is the strategic framework for how we would do that and make build in my partnership that ladders up to the strategy strategic stories. But what you have then is you have the origin story where you are now and you have a strategic north star where you're going. And then that allows your organisation to shift and change until it can help get to that certain future or that's their clear future, not the certain future.

Gillian Pillans [00:10:19] Coming up in the second half of this CRF cast, Kyle and I explore the typical barriers that get in the way of sustained behaviour change and what we can do to overcome them. We also discuss why choosing the wrong metrics to judge the success of a new venture can lead to transformation being stifled before it gets going. We finish our conversation by discussing the opportunities HR has to play a pivotal role in transformation.

[00:10:50] If you enjoyed the CRF cast, please subscribe to our channel. By searching for the Corporate Research Forum on iTunes or Spotify, you can sign up to get the latest additions automatically and do share with your colleagues and leave as a review.

[00:11:07] So in the book, you share lots of stories around using virtual reality, augmented reality, all sorts of fantastic technology to help people envision where are heading to. And yet at the same time that the things that get in the way of successful change tend to be human factors. Yes. So the second stage in Europe methodology is really around identifying this human factors and then locking those changes and opening up the sort of behaviours that are required to support new ways of working. If I've interpreted that, it's exactly right. Yeah. So can you tell us a little bit more about how your approach goes about tackling those human factors that get in the way of of success?

Kyle Nel [00:11:49] Yeah. This also goes back to just a fundamental, I think, lack of understanding of how to get stuff done. There's a belief once again that if you have the best idea, if you have the best tech, that somehow it won't work and win in the end. And that just isn't true. And so how do you address those things? If you really believe you have the next great thing, why not use all of your effort? I'm trying to understand the organisation so that you can hit every single bottleneck, every single stage gate and then address how you would get through that in a strategic way.

[00:12:20] Like if you're bringing a product to market, use those same tools, but do them internally first. The thing one of the things that drives me nuts is to hear about, oh, just focus on the customer and everything will be fine. It's not true at all. You'll never get to the customer if you can't get through your board. So why do we focus your first customer? Is your board or your executive team or whoever it is that you need to get through? And the tools are very simple. It's going back to Joseph Campbell, literally write down every single step that you have to every actual tangible step, every board meeting, every meeting need to have, and then write the write that down and then write the people that you need to influence in order to clear that barrier and then write down who the archetype of that person is. So is the 12 union archetypes. So you can use whatever arcane type system that you want. And then you also do the same thing for yourself. And what you can see then is how you would position your idea or the thing you're trying to get through in a different way. So let me give an example. You know, one of the biggest issues that people and innovators or change people faces is working with legal and risk right now. You hear this all the time. Oh, legal and risk. Well, what is the what is legal analysts job? Their job is to keep you from burning the whole thing down because they want to keep the company going. Right. What is your job? You're trying to change and innovate so that you will keep the company going. Your goals are the same, but the way you're coming out are completely different. So instead of coming at it with the innovators, we can do this. We can do that instead come at the lawyer with if we don't change, we don't take measured, meaningful risk, we will disappear. All of the stories blockbuster series may go on and on and on. They're very real in our lifetime and there's nothing to say that that won't happen to us. It's risky not to take risk. And when I've done that in the past, I completely reforms the conversation instead of me just talking about stores and space and robots that roam the stores and could run somebody over to something that feels totally tied in to what their purposes. So all I'm saying is this allows you to reframe the conversations in a way you're positioning it person to person, point to point, so you can get your ideas through, OK.

Gillian Pillans [00:14:28] And there's getting the ideas through. And then there's sustained behaviour change, which is I guess it's always further down the line. And that requires a kind of ongoing commitment to do things differently. So what sort of barriers to you came to see that? And then how do you deal with those.

Kyle Nel [00:14:44] Great Segway to a point number three, which is all tied to what are the proclivities of the organisation? So I will we looked at is everything that is a natural inclination of the person or the organisation. Try to address it and then find new solutions. So, for instance, humans, a natural thing that we love a story. Why do we use story? What does an organisation love? Organisations love longitudinal data. They love it. And so once you start collecting a data point, then you optimise against it. And that can be good. In a lot of times I can be very bad. So then you need to create new ways of measuring. And that's why we use applied neuroscience. So instead of using mature metrics, this is the one point that I always tell people, whatever it is that you're using to measure your mature existing business, do not use that on something that's new.

[00:15:31] It will definitely never win. Why would you compare something in its mature stage to something that's nice and form and wonder why it never won? And if you go back to all the apocryphal and actual stories about Kodak and others, one of the big reasons they weren't able to make it happen is not because they didn't put money and resources against it. Using mature metrics in a nascent business, and so in order to avoid that, literally pulling back and using entirely different metrics by using metrics in order to understand what's working or not working. So like, for instance, with us on neuroscience, we're able to use EEG headsets and eye tracking goggles and use that in virtual and augmented reality to see what engagement is. Our people engage. Are they liking it? Is there an emotional reaction? That's all I really care about. I don't really care if you're going to buy something. I don't care what the sales price point is at that point. If I can. The idea is if you can gather your attention and keep it and you like it, then that should translate into into the behaviour that we want. You said you had to new ways of measuring that rather than just asking people what they thought and or just using sales as your only metric.

Gillian Pillans [00:16:41] So you've you've talked to lots about neuroscience and applied neuroscience and you've used MRI scanning, you've used goggles, you know, oh, this kind of fantastic technologies, brain imaging, etc. What about if you don't have the resources to use those kind of technologies? Are there alternative ways that we can apply some of the some of that the insights from from your assigned to alone?

Kyle Nel [00:17:10] No question. Thank you. That's it's a really great question. Either you use what we usually use and so those are actually fairly inexpensive. So if you're running a traditional study, like a traditional survey, it's about a comparable cost to running traditional circuits.

[00:17:23] The cost isn't that high and you get much more rich data. But if that's still kind of out of reach and it is for a lot of organizations by a bunch of behavioural economics books. Dan Ariely And predictably Irrational is a book that every business leader in the world should read and then any other. Daniel Kahneman and a bunch of other things. If you read those, you'll be able to identify different ways to identify system one and system two and to set up experiments and then use that as a way of making things happen. In the book, we lay out really simple principles that anyone can use with neuroscience without neuroscience, anything, and we call it the experimental design canvas. So we all did this in grade school hypothesis driven variable testing where you identify what it is that we're testing for. How do we measure it? And then you set a time horizon like any good scientist. I've always, always, always shocked to see these big fancy organisations that don't have rigour around this. So you get to the end of a test and you're like, well, how do we do? Let's turn to the finance person and see what happened. That is the wrong idea. That experiment should be set up from the get go with a hypothesis or hypothesis and then you back into it. So the book lays out a very simple framework to be able to do that and then ways to get that buy in through the organisation using a simple framework. So what I would say is neuroscience is one tool that sits inside the experimental design framework, but experimental design should be the base and it costs nothing.

Gillian Pillans [00:18:50] Yeah. And I guess what often doesn't happen in organisations is this idea of perhaps winning a B testing or experimenting with different options. It's kind of, you know, all your chips are on black. If black comes up, great, but oftentimes it doesn't.

Kyle Nel [00:19:06] And how and how weird is that? Right. So even so, people will always still they'll ask. So how's it doing? Whatever it is. Or I'll say and it's a very nuanced answer because nothing is all good and nothing is all bad. It's everything that's working, not working.

[00:19:21] And how they at an angle and amalgamate together. So how do you break those things off and then understand really the next iteration is so much better. And unless you have the experimental design framework, you won't understand which aspects are working and not working to be able to reform the next phase.

Gillian Pillans [00:19:37] And the other thing you talk about in the book is this idea of a Trojan horse, which, you know, I think is that it's a lovely image. Tell us a bit more about that. Maybe the idea if you can share some examples of that.

Kyle Nel [00:19:47] Yeah. So the Trojan Horse idea, I mean, it's everyone knows about the good old Trojan horse. You know, there's there's this sneaky good and there's the sneaky bad is the way I would say it. Right.

[00:19:58] And I would reframe it in a different way, actually, where so many people will talk about addressing the corporate immune system. You know, whenever you try something new, the organization seems to have an involuntary reflexive reflex to kind of get it out and how the immune system kicking in. This year, different. Get out of here. And so how do you address that? Well, why does it? Why does it do that? Because it sees you as not them. And there's something really wrong with that. And the storytelling allows for that to change. So when you're that when you're coming in with new ideas, what are the old people think? The people that have been around the organisation for a while, they think, oh, that means that I'm out because that's been their experience in the past or friends have had that. What the story allows you to do is to see how what you're doing. Ladders up to the universal narrative where we're going. And. The new ideas, the new team folks are flattering. And that's the Trojan horse. It gets you gets in there and it becomes insidious in a good way where everyone then starts using the same nomenclature and everyone starts blabbering up the same ideas and no one feels on the outs. If they if they really want to be in and that's what makes that so unique and so different. We as humans have been doing that implicitly or explicitly since time began. It's just time that we rediscover some of these tools and apply them to our business.

Gillian Pillans [00:21:17] OK, so let's do a bit of a thought experiment. You talked about Kodak and it's a story that will be familiar to many of our listeners. So applying your techniques, if you were in Kodak back then, what would you have done differently? Where did they go wrong?

Kyle Nel [00:21:32] Yeah. Kodak is used as a whipping post for everything. Right. And if you look at this, the apocryphal story, right or wrong, was that they invented the first digital camera. Right. And they did. But they didn't just invented. They spent years and years in teams and teams of people improving and making this thing amazing. So they didn't just, like, invented and walk away. I mean, they spent a lot of time and resources against it. What was missing was a they were using.

[00:22:00] The most important thing, I think, is they were using mature metrics against a nascent business. So, of course, a digital camera was terrible compared with 35 millimetre incredible traditional analogue camera. Of course, it was never not even close. But what they didn't realise was that their market was not the photographer. Their market was anyone that wanted to capture something. And that's what they missed. So they didn't have a universal stroke story of where they were going. They didn't have a strategic narrative. They were just operating their very profitable business and then thought that was going to continue forever. Mistake number one. And number two, they had no real way of assessing this new thing compared to the old thing. And they were comparing it. And then they were also allocating resources based on what was going to make us the most money in the short term. So we all have fallen prey to that. I have fallen prey to the same mentality. And so if you unless you have systems that keep you on track, you will also fall to this.

[00:22:57] So those those three things we're missing in the Kodak story at that phase and in a crash that killed him. Same thing happen to Blockbuster, to that opportunity by Netflix for a couple million bucks. They had an opportunity to even create a complete and total copycat of it, which they did later on and near that death of Blockbuster. But they weren't able to see what people really wanted. I mean, if you go back to companies before they were decimated, years before when they hit the blockbuster Netflix moment, you can see in their shareholders meeting minutes they'll say things like, we need to focus on the core. We need to get back to our fundamentals. People really like to stand in line on a Friday night and get a movie. I mean, just ridiculous things that we'll see we see later on. But then how do you get yourself out of that? The only way to do that is by these three principles that we laid out. So as we can tell so far, we could go.

Gillian Pillans [00:23:46] Okay. So many of our listeners are going to be HR professionals who who are supporting their organisations through some form of transformation and or maybe trying to make change within their own functions as well. And do you have any specific insights or recommendations for the HR function?

Kyle Nel [00:24:04] It's we're saying before we started talking, you know, our most of our clients now, not most, but many of our clients are heads of research at large institutions in our research, but they charge in large, large institutions. And I did not see that until we till I started doing this. This role is unique position where you see across the entire organisation. And your job is to not only serve right now, but to prepare for what's coming and also seeing trends and hiring attrition and all these things. I mean, it's really the canary in the coal mine. So it's a very unique spot to be able to assess strategically what needs to happen and what's not working. What is working. Right. Much more so probably than other parts of the business. And and also to HR, because of hiring and firing and attrition is not insulated to like the internal marketing of we're doing this, we're doing that. Well, I still can't hire people because people are understanding what we're trying to build. So for an HR professional, they see the need to have a cogent strategic narrative, just from a strategic standpoint of how do we hire these people and keep them in the positions they're in. So that's really real and important. And the other one that's come up a lot is training. So we've spent a lot of time to VR and augmented reality training. Training is a critical component to most HR professionals portfolio, but training is pretty static and not much fun for the person taking the training or the person making the training. So we've developed a whole bunch of new VR and our training systems to be able to help with that. So I'm I'm all I'm saying is there are all of these new tools that seem like they might be out of not in the purview of an HR professional are exactly in the purview which for professional. Using neuroscience, using VR for training, using storytelling, using artificial intelligence to be able to assess and understanding things honestly and truly to the leader of an HR group is the one person using all of these tools in order to build the future.

Gillian Pillans [00:26:06] Kyle Nel, thanks very much for joining us.

Kyle Nel [00:26:08] Thank you.

Gillian Pillans [00:26:12] Let's take a moment to summarise the key points of my conversation with Karl Nel.

[00:26:17] We know that most organisation transformation efforts are doomed to fail. So how can we increase the odds of success? Karl suggests three key principles to follow. First, develop a strategic narrative that sets out a compelling story of what the future could look like. Humans are wired to make sense of the world through storytelling. It's an ancient art, but it's highly relevant to modern organisations. You can even use science fiction or comic books to really shake things up.

[00:26:46] Second, you need to develop a system for identifying where the bottlenecks to change are likely to arise in your organisation. You have to pick off the critical influencers who will make or break your transformation efforts and work out in detail how to get them on board, overcome their objections and corral them to support sustained behaviour change.

[00:27:09] Third, when it comes to measuring success, the principle of what got you here won't get you there applies. You have to develop hypotheses to test as you roll out new ideas that allow you to work out whether they're working or not and whether they're likely to achieve their longer term goals. This usually means creating new metrics as the ones you use to evaluate the performance of your core business are likely to stifle a new venture before it reaches any kind of scale.

[00:27:37] Finally, some advice for HR as its function.

[00:27:41] We are uniquely placed in our organisations to see what's coming over the horizon, to spot emerging trends and to help organisations get ready to act. That's an opportunity not to be wasted.

[00:27:53] Kyle talks about the power of storytelling in making transformation happen. You can check out the sheriff's report storytelling, getting the message across on our website at www.crforum.co.uk Also, check out Dan Ariely, whose book Predictably Irrational, which sets the record straight about how humans really make decisions.

[00:28:18] Many thanks again to Kyle Nel for taking the time to share his work with us.

[00:28:27] You've been listening to the CRF cast with me, Gillian Pillans, research director at CRF. You can find out more on our website at www.crforum.co.uk. Follow us on Twitter @C_R_Forum or join the CRF group on LinkedIn. Bye for now and thanks for listening.

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