Forecast Skill “Demand”

What skillsets does your organization need to fulfill its performance aspirations? This is a vital question to ask and answer. Consider an organization that in the short-term needs to deal with margin compression in its industry by cost-cutting, then in the medium-term is looking to grow in certain high-growth specialty markets in which it currently only has small footholds. Without having thought about the skillset requirements of the full aspiration, there’s a real risk that well-intentioned leaders needing to economize and hit quarterly expectations on cost reductions will cut into the very workforce (which in the current environment feels on the fringe) with the skillsets needed to deliver the medium-term growth strategy.

Determining what skillsets are important typically involves interviewing business leaders and functional experts and asking the following: What technical and functional skills are most important to the strategy? Which skillsets require doubling down to win the war for talent? What roles create the most value and/or are most essential to risk mitigation? What does “good” versus “great” talent look like in the roles described as important? And so on.

These questions are not complex or obscure, but they often don’t get asked. When they are, the answers converge very quickly. When P&G underwent its massive changes under Alan G. Lafley’s initial tenure, the company quickly honed in on a shortlist of skillsets required, among them brand management, innovation, and leveraging scale. At BHP, cost-minded operational leadership was at the top of the list. For IBM, consultative sales was the key priority. At GE, it was process engineers. At Google, the priority was the ability to attract and retain talent. And so on.

The above examples may sound obvious, but be warned that sophistication is required. Consider McDonald’s. That supply-chain management and marketing are strategic skillsets for the world’s largest fast-food chain will come as a surprise to no one, but the company’s most strategic skillset is neither of these things. As founder Ray Kroc once remarked, McDonald’s isn’t in the restaurant business; it’s in the real-estate business. In fact, it didn’t start to turn a profit until Kroc set up a realty company to purchase prime tracts of land both for his own use and for renting out to other franchisees.⁴ The care that McDonald’s puts into selecting exactly the right locations for the properties in its vast portfolio—more than 36,000 restaurants in more than 100 countries—enables it to maintain an edge over the competition, especially when establishing footholds in developing markets well ahead of the pack.⁵

Once you’ve identified the skillsets that matter, it’s time to create a rough forecast of how much of each one is required. Will it be a small group of logistics engineers on whose algorithms rest huge swings in value? An army of account executives who transform the sales force into one that brings the full suite of company products and capabilities to customers? A central group of merchants savvy at managing product selection and inventory in omnichannel formats? Having a point of view on how the magnitude of priority skillsets will change over time is vital to ensuring requirements are met.

Understand Skill “Supply” Dynamics

Having decided the skillsets that are strategically important, the next step is to undertake a structured inquiry into their current state in your organization and to understand the related external dynamics. More specifically, we advocate companies explore three areas: quality of existing skills, quantity, and comparative ability to attract the necessary quantity of the right skillsets in the talent market.

When it comes to assessing quality, this is a good time to recall the dangers of the optimism bias we discussed in the last chapter—even the best-laid change plan can be undone if an organization overestimates its skills. Objectivity is vital. For example, a global manufacturer designed a growth program that depended on sharing best practices across its plants. It was dismayed to discover that its track record in this supposed strength was patchy at best. A mining company was convinced its health and safety-related skillsets were such that it gave the company a competitive advantage in the talent market for important frontline skills they were looking for. Unfortunately, this belief didn’t stand up on closer examination and it was back to the drawing board.

How can you make a sober assessment of the skillsets in your organization? There’s a vast array of tools to help you do just that—far too many, in fact, to list here. Many of them are geared to specific skills, but most fall into the categories of performance metric assessments, benchmarking, or observational assessments (grids that break an institutional capability down into its component parts and describe what “poor,” “good,” and “great” look like so that you can compare the description with the reality at your organization).

In order to assess the quantity of each skillset you’ll need, a more numeric approach can be employed. Combining more traditional internal data sources (e.g., workforce growth data by job code, attrition rates, retirement eligibility) with external data sources (e.g., government labor statistics, studies on workforce trends) enables predictive models to powerfully forecast different supply-side scenarios and their implications. This is not to diminish the importance of talking to subject matter experts, as well; their views on where they foresee talent shortages are often very instructive.

The final aspect to consider is the comparative ability of your organization to attract the right skillsets in the talent market. This work involves using focus groups, social media analyses (sites like Glassdoor and LinkedIn can be invaluable), exit interviews, and site visits to articulate how a company’s employee value proposition (EVP) stacks up against the competition in key skillset areas. EVP dimensions to consider relate to a great job (interesting, opportunities, meaning), great rewards (wages, benefits/perks, recognition), a great company (reputation, culture/values, health!), and great leaders (inspirational, supportive, empowering). A great EVP is distinctive, real (not just marketing), and targeted specifically to the skillset in question.

Determine How to Close Gaps

At this point you have a solid handle on both the supply and demand side of the skillset equation. With this information, prioritization becomes fairly straightforward. We advocate using a simple matrix to do this, as shown in Exhibit 4.1. One axis is an assessment of the importance of the skillset (based on future demand and value at stake) and the other axis assesses the difficulty in attracting and retaining it (based on scarcity of supply and the strength of your EVP).

By way of example, consider an advanced manufacturing company who plotted over forty skill categories onto this matrix. One role in the “step function” category was that of cyber-security expertise. It was considered important because the strategy involved pivoting to defense-industry clients who demanded a far higher level of cyber security than the existing base—to the extent that the company forecasted, it would need to grow the cyber experts by 15 percent year-on-year as a proportion of the total workforce. It was considered difficult because of the combination of its scarcity (forecasted industry talent demand shortages of over 1.8 million employees in the next five years) and the challenges the company had in attracting talent away from other opportunities in technology and government. Witness to these challenges was the fact that early career exits from the company were four times higher for cyber-security experts than the company average.

At the same time, the company had similar EVP challenges for IT talent broadly, yet the demand for IT talent and criticality to the new strategy wasn’t nearly that of cyber expertise. As such, general IT skillsets fell into the “quick wins” category. In the category of “maintain” were the company’s fabrication-related skillsets. The company had a broad supply base, a well-honed process for training these technicians, and the strategy was pivoted far more to services, and therefore the role was less strategically important than in the past. Further, the strong unions in these areas had ensured that the EVP in such role categories was strong. Finally, in the “continuously improve” category was systems engineering. The role was vital to success in the increasingly complex projects the company would be taking on under more and more fixed price contracts. At the same time, the nature of the work that these engineers would be doing was very attractive, supply wasn’t overly constrained, and the company had a strong presence and reputation at the top universities with relevant majors.

With skillsets prioritized, the path forward to close any gaps can be explored and decided on. To what extent will you build the skillsets you need through reskilling, upskilling, retaining, and/or increasing deployable hours? To what extent will you acquire the skillsets you need through hiring individuals, tapping into new talent pools, and/or what has become known as acqui-hiring (buying out a company primarily for the skills and expertise of its staff, rather than for its products or services)? To what extent will you borrow the skillsets by leveraging contractors, partnerships, or outsourcing?

Take Walmart, for example. To deliver against its omnichannel strategy required a significant build-out of its digital capabilities. A vital part of its change efforts included acqui-hiring through the acquisition of more than 15 small companies, adding 3,500 employees to provide it with the search, site optimization, customer loyalty data analytics, social media analytics, and data science skills it needed. IBM, faced with a gap in the skillsets it needed at scale to perform analytics and development work, successfully partnered with Topcoder to crowdsource the UI/UX, application development, and data science skills it needed to keep pace with its growth aspirations.

Of course, there also may be overages to deal with in some areas. In these cases, the right skillset rebalancing approach may involve redeploying employees or releasing them altogether. By building a long-term, scenario-based view, you can plan these actions well in advance in order to minimize disruption and maximize fairness. For example, when tire manufacturer Michelin changed its performance aspirations such that it needed significantly fewer frontline manufacturing skillsets, it allowed factories years of notice and worked methodically through alternative paths for employees. The result was delivery of the strategy with limited headcount reductions (many workers were reskilled in new specialized lines of business) or related labor disputes.

The experience of a heavy equipment manufacturer illustrates how the steps we’ve described above come together in practice. The first step they took to understand skillset “demand” was to analyze the skill requirements of the enterprise strategy. This wasn’t a high-level, hand-waving exercise, and instead involved forecasting full-time equivalent employee requirements over five years. In total, 33 skillsets were assessed to determine if more, less, or the same would be required going forward. A new pipeline of digital and analytic talent, a shift in emphasis from structural and production engineers to advanced manufacturing and systems engineers, and broadened procurement talent expertise would be needed, among many others.

Once the “demand” side was understood, the next step was to look at the “supply” side of skillsets. Internal and external data was combined with predictive analytics to forecast the availability of skillsets in different scenarios. Additionally, current and future talent pools were identified (both university graduates and experienced hires). Further, the company’s employee value proposition was benchmarked against other companies competing for the same talent. To prioritize where to focus, the supply and demand views were integrated, and a shortlist of skillsets were chosen to focus on at the enterprise level. Specific action plans were then put in place to close the skillset gap in these areas, as well as to ensure areas of existing strength were protected.

At this point in the Assess stage, you will have a razor-sharp view of the skillset areas where you have gaps and will know how to fill those gaps. If they can’t be filled, you may have to revisit the Aspire stage! Rest assured more work will be done in the Architect phase to create specific action plans to ensure you will have the right skillsets in place at the right time. Before we get there, however, there is work to do on the health side of Assess.

Identify Helping and Hindering Behaviors

In all that follows, we’re going to work through four scenarios to bring the concepts to life and make them practical. The first will be an apocryphal story we’ve borrowed from Gary Hamel and C.K. Prahalad. The second, third, and fourth will be from real change programs pursued by a bank, telco, and manufacturing company respectively.

Let’s start with Hamel and Prahalad’s story: four monkeys are sitting in a cage with a bunch of bananas hanging from the roof, accessible by a set of steps. Whenever the monkeys try to climb the steps to get to the bananas, they are blocked by a blast of cold water. After a few days, the monkeys naturally give up—they realize there’s no point in trying to get the bananas. Researchers then remove the water hose and at the same time replace one of the original monkeys with a new one. On seeing the bananas, it starts up the steps. What happens next? The other monkeys, being social creatures, pull it down before it gets blasted with water. The new monkey is startled, looks around, and starts again up the ladder. The other monkeys again keep their new companion from climbing the ladder. This happens again and again until the new monkey accepts the group code of conduct and doesn’t bother to go for the bananas, either.

Over the next few weeks, the researchers remove the rest of the original monkeys one at a time and replace them with new monkeys who’ve never seen the jet of water. Even though there’s no longer anything to stop the monkeys from reaching the bananas, each new monkey is always pulled down by the others until they submit to group norms. By the end of the experiment, there are four monkeys in the cage, none of whom have ever seen a jet of water. There are perfectly ripe bananas sitting on a platform with unobstructed steps leading to them. Yet, none of the monkeys tries to climb the steps. They’ve all learned the unwritten rule that, “You don’t grab the bananas around here.”

This story has been repeated countless times since it was published because it offers a number of lessons for change leaders, which we’ll be working through in the pages that follow. At this point, however, we simply call out that the management practices of the past—the jet of water—had driven a certain set of behaviors in the monkeys. When “management” changed that practice, it’s notable that the behaviors didn’t change. The lesson: mindsets ingrained by past management practices remain ingrained far beyond the existence of those practices.

Let’s make this real in the business examples we’ve teed up. The bank wanted to affect its customer focus management practice in support of its growth aspiration to bring “One Firm” to its clients. An inquiry into employee behaviors revealed that roughly 10 percent of the salesforce was already behaving in the desired way, with cross-sell rates that were very high. The vast majority of the salesforce sold various bundles of product with the initial sale, but very little beyond that. A small group were characterized by only selling one product to customers.

The bank then assessed what the 10 percent were doing that the others weren’t. They found that two behaviors categorically differentiated the high performers from the average: the number and nature of questions they asked to profile the customer, and the extent to which they educated themselves on the bank’s product set. Knowing this, the bank’s leaders then created a change program aimed at giving the average salespeople support tools including scripts with good profiling questions to ask and education about the bank’s broad products sets. The program was rolled out with great fanfare, effort, and cost—and sales barely improved.

We’ll come back to the bank, but first let’s introduce another example. As part of its health goals, a telco wanted to see a step-change improvement in its people performance review practice. Assessing today’s behaviors, it saw that managers spent most of the performance review conversation explaining the complex rating process and avoiding delivering tough messages. After an extensive benchmarking process vis-à-vis best practices, the company put in place a new system—one with a dramatically simplified process and rating system, and where reviews happened every three months rather than occurring annually. Training was provided in the rollout on how to have a productive and performance-focused conversation—and the behavior change achieved was negligible. Without being able to complain about the process, leaders instead often cancelled reviews or simply spent the time on small talk and sugarcoated what otherwise should have been hard messages.

Now let’s move to the third example, and then we’ll talk about what all of these have in common. A manufacturer was pursuing an execution edge health recipe to support its performance aspirations, for which knowledge sharing was a vital management practice to get right. Many of today’s behaviors were hindering progress: knowledge was hoarded, solutions to similar problems reinvented locally, and no one asked for, or offered, help. Having studied other companies where the opposite was true, the decision was made to invest in a knowledge-management technology platform to facilitate the documentation and sharing of knowledge. Hundreds of millions of dollars later, the system was up and running—and a complete failure in that only a select few used it.

In all of these examples, the companies did a good job of assessing the behavior change from “hindering” to “helping” needed to achieve the desired health goals. This is a very important first step in the health assessment process, but it’s a mistake to stop at this level and move to solutions—as the examples illustrate. Had they taken the time to go one level deeper they wouldn’t have regretted it, as we describe in the next sections.

Uncover the Underlying Mindset Drivers

Why didn’t the seemingly logical actions taken by the companies described in the previous examples work? Because they were doing the equivalent of removing the water hose in the monkey experiment while the underlying mindset of “we don’t grab the bananas around here” remained. Had the underlying mindsets been addressed, the outcomes would have been profoundly different.

Before returning to the examples, it’s important to establish exactly what we mean by organizational mindsets. Put simply, they are the shared beliefs or assumptions that color employees’ perceptions and predispose them to behave in a predictable manner. To make this real, take for example one of the mindset shifts that Satya Nadella focused on when he took the helm at Microsoft. Having been inspired by Carol Dweck’s research on growth mindsets, he assessed that the desire of leaders and employees to be “know-it-alls” was underlying a number of dysfunctional behaviors. By emphasizing that it would be the “learn-it-alls” who will be valued going forward, significant positive behavioral change followed related to collaboration, risk-taking, and external orientation.⁷

Having established what mindsets are, let’s also talk about what they are not. They are not the equivalent of the water gun in the monkey experiment. For example, if you are inquiring about the mindsets that sit beneath a given behavior and the answer you are coming up with is “because incentive systems are out of whack,” “because they haven’t had good role-modeling,” or “because no one set the right expectations,” you are on the slow road to making change happen. These aren’t mindsets; they are external factors that influence mindsets.

Making changes to these external factors will indeed have impact in the long term, but just like removing the water hose had little immediate effect on the monkeys, existing norms ingrained at a subconscious level will persist for a frustratingly long time. The fast track to making change happen involves going one step further in your assessment and answering the following question: “Because of those factors (the incentives, role modeling, expectations, and so on), what have smart, hard-working, and well-intentioned employees come to believe about themselves and their work such that they believe it’s the right thing to do to act this way?” If you can name and reframe the otherwise subconscious thought patterns at play—and make reinforcing changes to the work environment, you will see rapid behavior change at scale.

The process to uncover the subconscious mindsets that drive behaviors is often visualized as an iceberg, as illustrated in Exhibit 4.2. The goal is to go beneath the observable behaviors into the depths of what sits beneath. The primary tool with which to get beneath the surface is based on an interview technique known as laddering . This approach is grounded in the theory of personal change set out by Dennis Hinkle in his 1965 doctoral thesis entitled The Change of Personal Constructs from the Viewpoint of a Theory of Implications. To probe ever deeper into an individual’s mindsets, Hinkle developed the “laddering” method of inquiry.

The method uses multiple techniques to uncover multiple levels of why they hold a particular opinion. The idea is that the “ladder” of questions prompts people to reflect on their deepest motivations, and eventually leads them to state the values and assumptions through which they construct their personal world. While the technique originated in clinical psychology, it’s been successfully applied in business in both marketing and the field of organizational change.

The principle behind the approach is no different than that of the “Five whys” approach that operations experts apply when the assembly line goes down. Before they try to fix a given issue, lean practitioners ask why as many times as it takes to understand the problem fully and get to the root cause (five questions are often enough to do the trick, hence the five whys). Take a textbook example. If a motor breaks down, a lean-minded operator won’t just replace it, but will ask why? “Because it overheated,” comes the reply. Then, again, why? “Because it wasn’t properly ventilated.” Why? “Because the machine is too close to the wall.” The operator then moves the machine away from the wall before replacing the motor. Without the probing for why, the fix would have been only temporary. The new motor would have soon burned out for lack of ventilation.

Although a good analogy, digging into the “five whys” of human behavior isn’t quite as straightforward as asking why five times. After all, we’re looking to probe into the subconscious drivers of behavior! Using an array of interview techniques, though, allows for a skilled interviewer to get to the root causes. The storytelling technique elicits a colorful and detailed narrative by asking about heroes, legends, or war stories related to behaviors. Provocations make deliberately exaggerated statements aimed at prompting an emotional reaction in the interviewee. Role plays put the interviewee into a realistic work situation or someone else’s shoes. Circling closes the loop between the current conversation and previous statements. Finally, hypotheticals describe imaginary scenarios and ask how they would play out.

Skilled interviewers also listen with an ear to three types of mindsets: not allowed, can’t, and won’t. “Not allowed” mindsets stem from perceptions of what’s expected and accepted. “Can’t” mindsets stem from perceptions of resource availability or capability. “Won’t” mindsets typically stem from one’s sense of identity, values, and perceptions of power dynamics.

Laddering interviews feel very different from traditional interviews. The former is focused on reflection—the interviewer knows he/she is on the right track when the interviewee has to pause and reflect on the question, unable to give a stock answer. The latter is typically more action-oriented, focused on gathering facts, hearing opinions, and verifying hypotheses.

By way of example, whereas a traditional interview may be along the lines of “talk to me about your sales process” followed by a set of clarifying questions, a laddering interview will say, “Imagine I’m a customer and you are going to sell me a loan that I’ve already shopped for online; let’s role-play that interaction.” The interviewer will then debrief by asking questions such as, “Where did you feel most and least comfortable in that interaction (and why)?”; “Who do you think would have handled it better (how, and why)?”; “What held you back from doing that in our interaction?”; “What do you feel was your best experience with a customer?”; “What made that different from our role-play?”; and so on.

Though powerful, the limitation of the laddering technique is that in large and diverse organizations it’s hard to scale (with our large company clients we typically conduct 30 to 50 laddering interviews in the Assess phase). A complementary technique, which allows for gathering a broader and deeper fact base regarding what’s going on beneath the surface, is conducting focus groups using visual cues.

The use of visual cues differs from traditional focus group techniques in a similar way that laddering interviews differ from traditional fact-finding interviews. The approach involves laying out a selection of 100 or so pictures on a table and asking participants to choose the images that best represent their feelings on whatever topic is asked about. For example, “What most energizes/frustrates you about the organization?” or, “What is your greatest hope for the organization?”

Depending on the type of change program in question, this approach can be targeted to specific business challenges. For instance, going back to our earlier examples: “Which image represents what it’s like to sell to customers?”; “Which image represents how it feels to be in a performance review?”; “Which image represents how collaboration and knowledge sharing works around here?” The benefit of using pictures is that they trigger a much more honest, emotive, and visceral conversation than asking stock questions that start with, “Tell me about.…”

A handy side-benefit is that the images representing the employees’ ideal organization can be adopted in the communications program later, thus forging a link between employees’ input and the themes in the change effort. After people have chosen images individually, the wider group can go on to create collages that summarize how they collectively feel about their work. Further, although it’s common to use a skilled and objective third party to help with focus groups, we encourage the leadership team to take part in a few of them, as well. Doing so is often extremely eye-opening—the mindset equivalent to what lean manufacturing executives call genchi genbutsu, or “go and see,” to find out what is actually going on.

The third tool for understanding mindsets more broadly in the organization comes from the social science methodology known as qualitative data analysis (QDA). This method mines rich sources of textual data (reports, websites, advertisements, internal communications, and press coverage) using linguistic techniques (known as narrative, framework, and discourse analysis) to identify recurring themes and search for causality.

One relatively basic and straightforward QDA technique that many are familiar with is the use of word clouds. A word cloud analyzes how often words are repeated in a particular text or texts. The more often it’s used, the bigger the word is printed on a page that contains all the words analyzed. An individual word cloud can be quite insightful in that what people talk about no doubt informs what they think about, which, as we’ve discussed, is a major driver of what people actually do. It can also be insightful to compare word clouds from different sources. For example, when a public sector organization compared the word cloud related to its stated values and leadership model with that of the executive teams’ various internal speeches over the previous year, it was shocked to find nary a word in common!

Taken together, laddering interviews, focus groups using visual cues, and QDA do a potent job of pointing to the underlying mindsets that drive observed behaviors. Let’s go back to the stalled change programs at our bank, telco, and manufacturing company. At the bank, the assessment stage revealed that two mindsets accounted for the lack of uptake of the new sales stimulation tools and training. The first was a mindset that, “My job is to give the customer what they want,” and the second was, “I should follow the ‘Golden Rule’ and treat my customers the way I’d like to be treated.” At the telco, performance management behaviors hadn’t shifted in its highly relational culture due to a deep-seated belief that, “Criticism damages relationships.” At the manufacturing company, the knowledge-management system was a ghost town because of the underlying belief that, “Around here, information is power, and good leaders are powerful leaders” (as illustrated in Exhibit 4.2).

Each of these root causes has something in common with the others—that the mindset in question is pretty darn reasonable. This is a vital point: when the right tools are used, the analysis of mindsets moves beyond otherwise flippant views of, “Our salespeople are afraid to talk to customers”; or, “Our leaders are wimpy when it comes to tough messages”; or, “Our people have ‘not invented here’ syndrome.” Too often, we run into change programs where, when we ask leaders what mindsets they are targeting, we get responses related to bureaucracy or being slow-moving. These are not mindsets. No reasonable people wake up each day saying, “My job is to be a bureaucrat” or, “Today I’m going to slow progress.” As we’ve indicated already, an important test that you’ve identified a root cause mindset, which is truly an unlock to health and therefore performance, is whether a smart, hard-working, well-intentioned person could reasonably hold the belief described, and yet that very belief can also explain the performance-limiting behaviors that need to be shifted.

Once you understand the root-cause mindsets, the next step is to reframe them to expand the range of reasonable behavioral choices that employees make day in and day out. Keep in mind that in doing so, you’re creating the caterpillar to butterfly effect we described earlier.

Reframe Root-Cause Mindsets

What different beliefs would create expanded and better informed behavioral choices for our average-performing bankers? How about if they believed their job—the way they add value to others—is to “help customers fully understand their needs” versus “giving customers what they want.” If they believed this, as it turns out the high performers whose behaviors were initially studied do, they wouldn’t need the stock list of profiling questions because they’d ask them naturally, as a matter of course. And what if they believed, as the higher performers do, in the Platinum Rule, “Treat customers as they want to be treated,” instead of the Golden Rule that says, “Treat others the way I want to be treated”? No doubt they’d show more behavioral flexibility in how they deal with their customers, leading to an improved experience. The health goal of increasing customer focus is, in turn, transformed.

What if our telco executives holding their performance management discussions believed, “Honesty (with respect) is essential to building strong relationships”? Surely the sugar-coating that came from thinking being honest would destroy relationships would give way to courageous conversations, which in turn would increase a baseline of trust in the organization and would allow for the people performance review practice to rocket into the top quartile.

And what if our manufacturing managers really believed “sharing information magnifies power” instead of believing “information is power” and therefore hoarding it? Were this the case, the company very likely wouldn’t have needed a multimillion-dollar system to prompt them to reach out to one another and share best practices.

Savvy readers will see that beneath each of the reframes described is a deeper shift in worldview. For example, moving from a view of giving customers what they want to helping them fully understand what they really need reflects a move from a subordinate to a peer mindset. Switching from Golden Rule to Platinum Rule is changing from a me-centered to an other-centered worldview. Recognizing that honesty builds rather than destroys relationships reflects a shift from victim to mastery. And choosing to believe that power is expanded by sharing, not that information is power, focuses on abundance not scarcity. Although these represent the more fundamental shifts that create the caterpillar to butterfly transformation effect, had the changes been framed in these terms, they would just become conceptual jargon without practical meaning in the workplace.

The best naming and reframing is not only profound (using practical and relatable terms yet reflecting the deeper change in worldview), but also insightful (making the subconscious conscious in ways that expand possibility), memorable (so it can easily be raised and discussed in the context of day-to-day work), and meaningful (specific to the organization’s context—evoking a “that’s so us!” response.

We’re the first to acknowledge that in spite of there being a practical toolkit to help leaders, working with mindsets and, in particular, the reframing step will always have a degree of art to it—probably more, in fact, than any other aspect of managing a change program. But that shouldn’t deter leaders from venturing into unfamiliar territory. Remember, perfection is not the goal. Plenty of us take art classes without expecting to end up like Picasso or Rembrandt. We may not paint masterpieces worth millions, but by learning the basics of composition and technique, we can become better artists.

Further examples reinforce what good looks like when it comes to naming and reframing. A retailer found that the shift from “listening and responding” (reactive mindset) to “anticipating and shaping” (proactive mindset) that sat beneath its customer focus management practice was vital. An engineering company that wanted to improve its practices for capturing external ideas found it was consistently over-optimistic about results and underestimated competitors. Through its assessment process it realized this was driven by a “winning means being peerless” (expert) mindset, which led to increasingly insular behaviors. Changing to a mindset of “winning means learning more and faster than others” (learner), prompted employees to look for best practices in competitors and beyond. You’ll notice that this is the same underlying shift (expert to learner) that Satya Nadella focused on at Microsoft, yet the articulation of how it manifested in the retailer was different, and hence the language related to the shift is specific to each company.

These business examples, while helpful, tend to be far less memorable than human health analogies. Consider the predicament of people with heart disease. Years of research have shown that most cardiac patients can live considerably longer if they change their behaviors by cutting out smoking and drinking, eating less fat, reducing their stress levels, and regularly exercising. Indeed, many make a real effort to do so. Yet, study after study has shown that 90 percent of people who have undergone surgery for heart disease revert to unhealthy behavior within two years.

That’s a situation that Dean Ornish, a professor of medicine at the University of California at San Francisco and founder of the Preventative Medicine Research Institute, was determined to change.⁸ He decided to try a new approach. Rather than focusing on the behaviors patients should adopt to survive, he decided to tackle their mindsets instead.

Dr. Ornish decided to reframe the underlying mindset beneath the patient narrative from, “If I behave this way, I won’t die” (fear-driven mindset) to “If I behave this way, my life will be filled with joy” (hope-driven mindset). In his words, “Telling people who are lonely and depressed that they’re going to live longer if they quit smoking or change their diet and lifestyle is not that motivating. Who wants to live longer when you’re in chronic emotional pain?” How much better would they feel, he posited, if they could enjoy the pleasures of daily life—making love, taking a hike, playing with their children or grandchildren—without suffering any pain or discomfort?

The reframe, reinforced by the types of mechanisms we’ll be discussing in the next chapter on the Architect stage, worked: 77 percent of his patients managed to make permanent changes in their lifestyles, as against a normal success rate of 10 percent.

As with the “profoundly simple” end product of the Aspire stage—a shortlist of management practices to either fix or drive to distinction—the end product of the Assess stage can typically fit on one piece of paper. An example end product is shown in Exhibit 4.3.

In Chapter 5, we’ll discuss numerous ways to influence and embed mindset reframes such as these. Further, in Chapter 6, we’ll share powerful techniques that prompt leaders to examine and expand their personal worldviews in relation to the more fundamental underlying shifts at play (e.g., victim to mastery, me to we, scarcity to abundance, fear to hope, and so on). We note here, however, that methods to influence mindset shifts can also be “profoundly simple.” At an aerospace company, while not the only thing they did by any means, one powerful intervention they made involved opting to include a laminated card on their name badge lanyards. One side of the card was red and had the performance-limiting “from” mindsets printed on it. The other side was green and had the performance-enhancing “to” mindsets. The card acted not only as a reminder of desired shifts, but also as a practical vehicle for providing feedback: in initiative meetings, employees called out when they realized old, subconscious patterns related to the “red” mindsets and related behaviors were at play by holding up their red card. This allowed everyone to pause and reset their approach. Employees reinforced “green” mindsets and related behaviors, too, thereby encouraging others that they were on the right track.

Before we leave our discussion of the Health Frame of the Assess stage, we’d be remiss not to mention that the academic underpinnings for everything we’ve discussed are rock solid. We haven’t gone into detail on this front as our goal is to create a practitioners’ guide versus an academic treatise, but those wanting more in this regard would do well to consult works such as The Unbounded Mind by Ian Mitroff and Harold Linstone; Peter Senge’s The Fifth Discipline; Carol Dweck’s Mindset: The New Psychology of Success; Edward Russo and Paul Schoemaker’s Decision Traps and Winning Decisions; Creating the Corporate Future by Russell Ackoff; Teaching Smart People How to Learn by Chris Argyris; and The Inner Game of Work by Timothy Gallwey.

All of these books reinforce that chasing behavioral change without addressing mindsets is like playing Whac-a-Mole in an amusement arcade. You pound one mole (behavior) into its hole only to find many more moles popping up all around you. As Gallwey himself explains, “There is always an inner game being played in the mind no matter what outer game is being played. How aware you are of this game can make the difference between success and failure.”⁹

We close this section with one of the most iconic mindset-related vignettes of all time to drive home the point one final time. Until the mid-1950s, the four-minute mile was regarded as beyond human achievement. Even medical journals judged it unattainable. Yet, in May 1954, a medical student named Roger Bannister smashed through the barrier with a time of 3 minutes, 59.4 seconds. In his memoir, Bannister explained he did what was once thought impossible by spending as much time conditioning his mind as his body. He wrote, “The mental approach is all-important … energy can be harnessed by the correct attitude of mind.”¹⁰

What is perhaps more amazing is that two months later, the four-minute barrier was broken again, by Australian John Landy. Within three years, 16 runners had followed suit. So, what happened here? Was it a sudden spurt in human evolution? A new super-race of genetically engineered runners? Of course not. It was the same physical equipment, but with a different mindset: one that said, “This can be done.” No doubt there are some “four-minute mile”-like mindsets sitting beneath the behaviors you see in your organization that, if broken through, will unlock a whole new level of performance in a similar manner to Bannister’s effect on the running community.

With that, we hope by this point you’re well and truly convinced that assessing mindsets isn’t something that should be written off as too soft or considered optional for change success. Missing this step will doom any change program to stalling or unacceptably slow and frictional progress until it’s finally revisited, either explicitly or implicitly. As we’ve shown, there are many well-established methods and tools that have been tested and proven in other fields, even if they are not yet widely applied in the business world. In fact, that they aren’t mainstream makes them all the more advantageous to you in making change happen better and faster than your competition (how’s that for a reframe?!).

Master Stroke: Balance Your Inquiry

We now turn our focus to the most important lesson from the field of predictable irrationality that should be considered during the Assess stage of making change happen. This change leader master stroke is best illustrated by a study carried out at the University of Wisconsin during which two bowling teams were filmed in action. Each team was then given its own video to study. One team got a video that showed only its mistakes; the other got a video that showed only its successes. After studying the videos, the teams competed again as the researchers looked on. What did they find? Both teams bowled better games than they had previously—studying game tapes is a good thing to do! What is a surprise to many, however, is that the team that studied its successes improved twice as much as the team who studied its mistakes. ¹¹

Researchers such as David Cooperrider, Suresh Srivastava, Diana Whitney, and others draw out an important point related to this research: if you want to motivate changes in behavior, it’s powerful to call out what’s working and ask, “How do we get more of it?” (a constructionist approach) versus to only point out all of the flaws and ask, “How do we fix this?” (a deficit-based approach). The latter works well for technical systems, but in human systems, a relentless focus on what’s wrong invokes blame and creates fatigue. The former, though, invites people to leverage their experience and build upon their successes.

Make no mistake, however; we aren’t suggesting change leaders only focus on strengths or calling out what’s working. In fact, we feel strongly that the way many leaders interpret “strength-based” thinking misses the mark. Strengths overplayed become weaknesses and there are such things as Achilles’ heels that simply need to be fixed or you won’t be successful. There is also a significant amount of behavioral research that suggests humans are far more risk-averse in pursuing upsides (going for the light on the hill, building on my strengths) than avoiding downsides (getting off the burning bridge, addressing my weaknesses). And don’t get us started on how the optimism bias plays into all this (even in calling out problem areas, if there isn’t a clear “from” in which an employee can see their role, they will likely see the “to” as something they already embody. More to come on this dynamic in Chapter 6).

Our recommendation is that leaders in the Assess stage put roughly equal emphasis on assessing what’s broken and therefore needs fixing and what’s working well that they want to see more of. Our assertion is backed by facts: large-scale change programs that emphasize an organization’s strengths as well as its weaknesses are three times more likely to be successful than those that focus on one or the other, and a positive correlation holds regardless of whether it is a “good to great” or a “turnaround change program.”¹² We suspect that had the researchers at the University of Wisconsin included in their study a team who studied both their strengths and weaknesses, that team would have improved even more than the others.

The true change leader master stroke lies one step beyond just calling out both sides of the deficit and constructionist equation. Instead, it lies in the idea that T.H. White, former president of GTE phone operations, describes in saying, “If we dissect what we do right and apply the lessons to what we do wrong, we can solve our problems and energize the organization at the same time … we cannot ignore problems, but we just need to approach them from the other side.”¹³

Sounds good in theory, but how does this work in practice? Consider a financial services organization that aspired to a “One Company” vision that would leverage the company’s breadth of products to serve customers and capture more scale efficiencies. Leveraging the OHI methodology, three management practices were prioritized as its health aspiration: openness and trust, customer focus, and strategic clarity.

In the first instance, the underlying mindset that drove the siloed behavior that diminished trust was a strong accountability muscle. Employees believed their job was to “run my area like I own it” (mine). Reframing the mindset to, “Run my area like I own the company” (ours) asked leaders to maintain the accountability strength and redirect it to the collective, and far more collaboration ensued. To increase customer focus, the discipline that accompanied the current “know your numbers” mindset (internal focus) was redirected to a mindset of “know your customer” (external), which dramatically changed how and where people spent their time. The short-termism that got in the way of strategic clarity was due to a mindset of, “Execution matters most—it is our strategy” (act first). The benefit of this mindset, however, was a strong ethic of getting things done. When that strength was redirected by emphasizing a mindset of, “Execution of our strategy matters most” (think first), smarter decisions on behalf of the enterprise were implemented quickly.

By way of another example, let’s go back to our heavy equipment manufacturer that we mentioned in the skillset section. The company’s vision involved becoming a top quartile industrial company, not just the best in their industry. Their health aspirations involved creating a step change in strategic clarity, role clarity, and performance management.

When it came to a lack of strategic clarity, it was the relentless focus on getting every detail right—a mindset of “no stone left unturned” (diligence) that had employees too focused on day-to-day execution to see the bigger picture. A shift to “focus on the big rocks” (discernment) asked leaders to put the same level of focus on longer-term efforts. Role clarity was being inhibited by a highly relational culture where things got done by “working the system” (informal). If those relationships were instead leveraged in service of “making the system work” (formal), role clarity would become self-generating. Performance management was inhibited by the problem-solving culture that focused on “fix the problem” (reactive) leading to deficit-based conversations and punitive actions being the norm. Taking the strong desire to solve problems and asking leaders to think of it slightly differently, to “prevent the problem” (proactive), unlocked profoundly different behaviors in performance management and beyond.

■ ■ ■

At the end of the Assess stage of transformation, you’ll have answered the question, “How ready are we to go there?” in relation to your performance and health aspirations. You’ll have identified the vital skill requirements required to fulfill your performance aspirations. You’ll have taken a long, hard look at the state of these skills in your organization and in the marketplace today and going forward. You’ll have determined how you’ll fill any gaps or deal with any overages.

You’ll also have uncovered the underlying mindsets that drive the limiting behaviors you observe in relation to your health goals. These will have then been reframed so as to unlock more constructive behaviors going forward. And you’ll have done all of the above through a balanced approach to inquiry—enabling you to leverage your organization’s strengths to address its weaknesses.

The journey through the Assess stage can be the most challenging in the whole change program—both because the work of long-term strategic workforce planning and exploring unspoken assumptions is typically not something an organization has a lot of experience doing, and because of the desire to “get on with it” in terms of taking action toward the aspirations that have been set. If you choose to skip this stage, however, we can assure you that you’ll be revisiting it once your change efforts stall, and at that point the work will be harder as high hopes will have begun to harden into cynicism and disengagement.

Done well, however, the view at the end of the Assess phase is universally positive. In the words of one executive giving feedback on the company’s skillset focus areas and mindset reframes, “Finally, we are discussing the undiscussables. These are the fundamental issues and dealing with them will drive lasting change.” ¹⁴ It’s now time to discuss the central question of the Architect stage of the change journey: “What do we need to do to get there?” (Exhibit 4.4)