Herd behavior is an epidemic in our society today. Known as large groups conforming to choices which may be either correct or mistaken as a result of social influence, psychology research goes pretty deep into this phenomenon. One definition I read for social proof is people assuming the actions of others to reflect correct behavior for a given situation. This effect is prominent in ambiguous social situations where people are unable to determine the appropriate mode of behavior, and is driven by the assumption that surrounding people possess more knowledge about the situation. Regardless of semantics, social proof is in every part of our world.
No doubt in some situations conforming to social norms is the right thing to do. But in business the fallacy of social proof is costing companies and our society billions of dollars each year. I spend most of my professional live working with companies who are trying to solve some kind of problem that involves change. Change is a difficult thing. People, in general, refuse to embrace change unless they are comfortable with it. But most change is anything but comfortable, so the ensuing resistance often results in inaction.
None of this is new to most of you who follow my blog. You are all in different businesses and have been involved with situations where people get in the way of driving improvements because of change. What I try to focus decision makers and influencers on every time I engage in change management is the fallacy of social proof. Entire company cultures are based on shopping around ideas and proposals to gain group acceptance before proceeding. My argument is that need for social proof is unnecessary and costs your organization millions every year.
Here are a few stats we pulled together in my company based on over 1500 projects in 30 countries the past several years:
- 90% of initiatives require some form of change management both inside and outside the organization;
- Approximately 23% of "new initiatives" or "new programs" actually happen. 77% never make it out of the gate;
- Less than 10% of companies admit to mandating initiatives as a way of doing business. Over 90% believe in gaining acceptance or support before moving ahead;
- On average, companies spend 5 months shopping new initiatives internally before deciding on moving ahead. That means many spend more than 2 quarters to get new initiatives off the ground...if successful;
- 80% of decision makers believe initiatives that were shelved for lack of support should have been executed.
The above translates to one thing in my mind: massive waste, inefficiency and lost opportunity.
I have been working with a financial institution that is on the brink of closing it doors. Having accepted TARP funding from the government back in 2008, this institution has yet to pay back a single penny on its loan and its future looks grim. Several initiatives over the past 3 years have failed to get off the ground, and the ones that did have failed to produce results due to half-hearted implementation. The people in this organization have a poor track record of driving the necessary change required to bolster revenues and they are running out of time.
One SVP told me that several initiatives proposed in the past two years failed to get the buy-in of people in the field. I understand the need for equipping those on the front lines with the belief in what you are asking them to do, its a huge part of getting things done right. But when you are on the brink of chapter 11 I'm not sure this step is as important as times past. At some point leaders have to direct, enforce and, if necessary, mandate. Truly great companies take the same approach when times are great.
Another top performing investment bank on Wall Street has a culture of getting buy-in before launching massive initiatives. This firm's belief is that they have the best people in the world working for them, so if your initiative can withstand the bombardment of questions, arguments and resistance, you will implement and succeed in a big way once you obtain social proof. Those ideas that don't make it are shelved. Its not uncommon for initiatives to be debated for 12 months or more. They believe this approach has made all the difference to their success, and its part of their DNA.
Perhaps where I have seen the most damage done from the fallacy of social proof is in the non-profit world. One organization I have served on the board of took three years to make some tough decisions related to leadership and finances. The need to get buy-in from Board members, Foundations and key staff members prevented much needed changes and cost the organization several hundred thousand dollars as a result of inaction. Everyone knew three years ago what needed to be done, but it took three years to gain support to do what we knew was right 36 months ago.
There is no silver bullet when it comes to driving change, and if you don't have support for major initiatives then they will ultimately fail. But leadership can short-cut the ridiculous amount of time, resource and money it takes to do the right thing. Or at least shorten it drastically. And remember, if you want to change behavior you have to address the basic human need for certainty. The best way to achieve this is through inspirational leadership.
None of this is new to most of you who follow my blog. You are all in different businesses and have been involved with situations where people get in the way of driving improvements because of change. What I try to focus decision makers and influencers on every time I engage in change management is the fallacy of social proof. Entire company cultures are based on shopping around ideas and proposals to gain group acceptance before proceeding. My argument is that need for social proof is unnecessary and costs your organization millions every year.
Here are a few stats we pulled together in my company based on over 1500 projects in 30 countries the past several years:
- 90% of initiatives require some form of change management both inside and outside the organization;
- Approximately 23% of "new initiatives" or "new programs" actually happen. 77% never make it out of the gate;
- Less than 10% of companies admit to mandating initiatives as a way of doing business. Over 90% believe in gaining acceptance or support before moving ahead;
- On average, companies spend 5 months shopping new initiatives internally before deciding on moving ahead. That means many spend more than 2 quarters to get new initiatives off the ground...if successful;
- 80% of decision makers believe initiatives that were shelved for lack of support should have been executed.
The above translates to one thing in my mind: massive waste, inefficiency and lost opportunity.
I have been working with a financial institution that is on the brink of closing it doors. Having accepted TARP funding from the government back in 2008, this institution has yet to pay back a single penny on its loan and its future looks grim. Several initiatives over the past 3 years have failed to get off the ground, and the ones that did have failed to produce results due to half-hearted implementation. The people in this organization have a poor track record of driving the necessary change required to bolster revenues and they are running out of time.
One SVP told me that several initiatives proposed in the past two years failed to get the buy-in of people in the field. I understand the need for equipping those on the front lines with the belief in what you are asking them to do, its a huge part of getting things done right. But when you are on the brink of chapter 11 I'm not sure this step is as important as times past. At some point leaders have to direct, enforce and, if necessary, mandate. Truly great companies take the same approach when times are great.
Another top performing investment bank on Wall Street has a culture of getting buy-in before launching massive initiatives. This firm's belief is that they have the best people in the world working for them, so if your initiative can withstand the bombardment of questions, arguments and resistance, you will implement and succeed in a big way once you obtain social proof. Those ideas that don't make it are shelved. Its not uncommon for initiatives to be debated for 12 months or more. They believe this approach has made all the difference to their success, and its part of their DNA.
Perhaps where I have seen the most damage done from the fallacy of social proof is in the non-profit world. One organization I have served on the board of took three years to make some tough decisions related to leadership and finances. The need to get buy-in from Board members, Foundations and key staff members prevented much needed changes and cost the organization several hundred thousand dollars as a result of inaction. Everyone knew three years ago what needed to be done, but it took three years to gain support to do what we knew was right 36 months ago.
There is no silver bullet when it comes to driving change, and if you don't have support for major initiatives then they will ultimately fail. But leadership can short-cut the ridiculous amount of time, resource and money it takes to do the right thing. Or at least shorten it drastically. And remember, if you want to change behavior you have to address the basic human need for certainty. The best way to achieve this is through inspirational leadership.
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Shahriar, excuse my brevity but that was excellent, again. Steve J
ReplyDeleteAgree 100%. While leadership styles need to adapt to the situation, too often leaders are taking the easer and lower risk approach of depending upon consensus to evolve instead of actively selling their vision for change, inspiring their teams and leading decisively from the front.
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