The Change Portfolio
I’m reading a great book right now: Beyond Performance, by Scott Keller and Colin Price. They are McKinsey consultants and have done tons of survey research with their clients to try uncover some new ways of thinking about organizations. A colleague suggested to me that they came to many of the same conclusions in Humanize, just from a different angle.
But there’s one piece so far that really jumped out at me: the need for a “portfolio of initiatives” once you start to change things. According to their research, companies that follow a “portfolio approach” to organizational transformation are 3.5 times more likely to be successful.
It’s a simple idea, really, following principles used in investing. If you have money to invest, you could just pick that one stock that you think is going to go through the roof and see what happens. You may end up very rich, or you may end up with nothing. The portfolio approach suggests that you balance your investments: some for long-term growth, with others where you’re shooting for short-term gain. You need a foundation of low-risk (and lower return) so you can afford to take some chances on high-risk investments. I am pretty sure there’s research that shows you’re more successful over the long run with this approach (but honestly it sounds like common sense to me). The “portfolio of initiatives” idea is not new to organizations. Lowell Bryan from McKinsey identified it when talking about strategy.
Turns out we need the same approach when we want to change our organizations. Keller and Price (and Bryan) use a grid with two axes: on one axis you consider how risky or familiar the change is, and on the other axis you consider the time-frame of the change. They argue you should have a balance along each axis. You need some change that is basically not a big stretch. It’s more like a tweak, or incremental improvement. But you don’t want them all like that. You need some changes that are more fundamental. Big bets on the future. And you also need some changes designed to produce value in the short run, balanced with others that will create much longer-term value.
Maddie and I like this approach when it comes to implementing the ideas in Humanize. If you simply set off to “humanize” your organization, you may not get very far. But you also can’t just create a random list of 100 ways to impact transparency, experimentation, relationship building, ownership, etc.–even if they are all awesome ideas. If we take Keller and Price’s research seriously, then we should increase our chances of actually reaching those humanize goals by choosing a balanced portfolio of humanizing efforts.