During the recent period, I’ve been surprised to see that this very mnemotechnic way to remember how to overcome resistance to change in an organization was far from being known by leaders. When I refer to it during my keynotes, I can see a number of attendees capturing it on their mobile.
Given the accelerating pace of change that all organizations are subject to, customer experience, employee engagement, and ESG sustainable transformations to name the major ones, revisiting how leaders cope with change management today is a healthy reflex.
So here is the formula for change, popularized by Beckhard & Harris in their book “Organizational Transitions: Managing Complex Change”, nurtured by numerous pieces of research that will help you remember a simple framework :
The beauty of it lies in its pragmatism, simple yet very powerful: it provides a first impression of the starting situation and the possibilities for change within a business or an organization. The formula stands for Dissatisfaction with the current state, Vision of the desired future state, and First steps to get there, multiplied by the perceived benefits of the change being more significant than the perceived costs of resistance (Resistance).
The Change Formula Explained
You’ll notice that the multiplication, let’s remember some simple math here, would be equal to zero if any of the variables are equal to zero. In other terms, if you neglect to paint a compelling vision for the future state (V) as an example, your result will be zero i.e. no traction for change.
But let’s describe each component:
- Dissatisfaction with the current state refers to the level of dissatisfaction individuals have with the status quo and their willingness to embrace change. It also can be read as the cost of inaction to the values, priorities, or needs of the individual. The level of dissatisfaction with the current situation needs to be high enough for employees to acknowledge a need for change, try to project them in the future, and feel the pain if nothing changed e.g. no click & collect during the lockdown.
- The Vision of the desired future state refers to a clear and compelling vision of what the future will look like after the change has taken place, also articulating the benefits of the proposal to the individual whether in values, priorities or needs. Employees must first accept the objective to be achieved. This entails reassuring them as regards both their contribution to the change and their future role once it has occurred, addressing legitimate concerns about their own value.
- First Steps refer to the actionable steps that need to be taken to bring about the change. In my experience, this is very often underestimated or mishandled by top leaders when driving change, resulting in confused middle management to translate the desired change into day-to-day decisions and operations for their teams. The first steps can be successive baby steps, not too big of a stretch, but paving the way for future stretches outside the comfort zone. No one succeeded in running the marathon a week after making the decision, but rather started to run small distances in the early days and then several kilometers with great satisfaction.
- And finally, the perceived benefits of the change must outweigh the perceived costs of Resistance in order for individuals to support and embrace the change, with a clear understanding of what should they do next in their day-to-day and even better, what initiatives, ideas, and suggestions could they bring to the mix. Human nature really is risk-averse. Whether referred to as the status quo or a comfort zone, many people are more motivated by avoiding loss than they are by seeking gains and improvements. Resistance to change is therefore a natural reaction, which justifies ensuring projects are properly prepared and supported.
By using this formula, organizations can assess the level of resistance they may face to a change initiative and determine what steps they need to take to overcome that resistance. This includes addressing any concerns or objections individuals may have, communicating the benefits of the change clearly and effectively, and ensuring that individuals are involved in the change process.
In summary, the DxVxF > R formula is a helpful tool for change management as it helps organizations to understand the drivers of resistance to change and how to overcome it by highlighting the importance of dissatisfaction with the current state, a clear vision of the future, and the benefits of the change outweighing the costs of resistance.
Examples of organizations using this formula
In all successful examples, involving all level of management and employees in the process is key. Good ideas are truly coming from all, starting with the people directly in contact with your customers first.
A healthcare organization was facing resistance to implementing a new electronic medical record (EMR) system. To overcome this resistance, the organization used the DxVxF > R formula by clearly communicating the dissatisfaction with the current paper-based system, presenting a vision of a more efficient and streamlined EMR system, and demonstrating the benefits of the change, including improved patient care and reduced errors. By involving staff in the implementation process, the organization was able to overcome resistance and successfully implement the new system.
A manufacturing company was facing resistance to adopting a new Lean production process. The company used the DxVxF > R formula by clearly communicating the dissatisfaction with the current inefficient production process, presenting a vision of a more streamlined and efficient production process, and demonstrating the benefits of the change, including increased productivity and reduced waste. By involving employees in the change process and providing training on the new process, the company was able to overcome resistance and successfully adopt Lean production.
A retail company was facing resistance to transitioning from brick-and-mortar stores to an online-only sales model. To overcome this resistance, the company used the DxVxF > R formula by communicating its dissatisfaction with the declining sales and profitability of its brick-and-mortar stores, presenting a vision of a more profitable and sustainable online-only sales model, and demonstrating the benefits of the change, including increased accessibility for customers and lower operating costs. By involving employees in the transition process and providing training on the new model, the company was able to overcome resistance and successfully transition to an online-only sales model.
These are just a few examples of how organizations have used the DxVxF > R formula to overcome resistance to change. By clearly communicating the reasons for change, involving individuals in the process, and demonstrating the benefits of the change, organizations can overcome resistance and successfully implement change initiatives.
Change in transitioning to a SaaS business
I have been involved in several major changes of business model from on-premise or transactional based, to SaaS or subscription-based model when acting as a Chief Product Officer or Vice President of Marketing with major vendors (Sun Microsystems, Sage, Salesforce, and Oracle). I must admit, rapid change was one of the appeals to working in Big Tech for me. I was thrilled when given the opportunity to present to large audiences, whether internally or to customers and partners, to motivate the change at stake. In those days, I was not familiar with the formula but in hindsight, I can recognize when I did not highlight one of the ingredients enough which resulted in delays or failure.
As a CPO with a software vendor that provided on-premise enterprise resource planning (ERP) software, I faced resistance to transitioning to a SaaS business model. I was stressing the dissatisfaction attached to not embracing SaaS for the next generation of software, projecting the executive committee in the near future when SaaS would represent more than 15% of market shares and could not be ignored as competition, hence for the D. I did also try different metaphors or used success stories as the Salesforce one, where I’ll be landing next in my career, to try to paint a compelling vision of where we could be, hence for the V. But I didn’t go enough in the details for each stakeholder (sales, product, R&D, service) to collectively design the first steps to get there. As a result, the fear attached to change from some of the on-premise product leaders derailed the transformation for several years, until a new CEO came in to force it on them with success but I was already gone.
To overcome this resistance, I should have used the DxVxF > R formula by clearly communicating dissatisfaction with the outdated and cumbersome on-premise software, unproductive for the development teams, costly to the customers, slowing down innovation, and not offering more predictable revenue growth based on a subscription model that shareholders and the board of directors appreciate a lot. Investors have been pouring billions via VCs and Private Equity to fuel the growth of SaaS which is now paramount in the software industry, but I was a bit early.
Presenting a vision of a more efficient and cost-effective SaaS model, and demonstrating the benefits of the change, including increased simplicity, reliability, scalability, and accessibility for users, one core branch to focus on for the development team, and taking advantage of cloud solutions to innovate faster. I should have also involved more our customers in the transition process, to find champions and provide training and support to ensure a smooth transition to the SaaS model. One new initiative for small and medium businesses was starting to get traction, and I could also have used this success to paint the destination as well as the first steps.
The company was in the end able to successfully transition to a SaaS business model, with customers embracing the change due to the many benefits it provided. The SaaS model allowed the company to offer a more streamlined and cost-effective solution to its customers, and it also helped to increase its revenue and profitability.
This example shows how a software vendor should be able to overcome resistance to change by using the DxVxF > R formula. By clearly communicating the reasons for change, involving customers in the process, and demonstrating the benefits of the change, you can successfully transition to a SaaS business model.