What NGOs and Nonprofits can learn from business
What does the invention of the wheel and enticing American consumers to start drinking coffee at cafés have in common? They all involve overcoming resistance to change. I’ve implemented Best Practices at companies such as Procter & Gamble, Tetra Pak, and Nivea. As a speaker at the United Nations Economic and Social Commission conference to foster Cooperation in Science, Technology, and Innovation, I’ll be sharing what I learned. Can NGOs and Nonprofits redeploy what companies do?
To spread Best Practices, we need to acknowledge that we are asking people to change how they do things. This typically causes fear. To mitigated that:
Stand in their shoes. This is what those being introduced to a change are thinking:
I know how to do this. I don’t how to do that. It looks complicated. People respect my expertise now. What if I don’t do it well?
When we implement Shared Services, I typically tell others that “I did it three times to others and had it twice done to me.” Frequently, those who are changing jobs are worried (in America, people change jobs 12 times during their career). Like other first-time parents, when my first daughter was born, I was terrified. I remember vividly how carefully I drove back from the clinic. The second time around, it just wasn’t as stressful (in America, couples have 2 kids, 1.73 if you are an economist).
The 3 most common objections to the implementation of Best Practices are:
That won’t work here. Imagine you are introducing the wheel to a tribe in the Andes. They point out: “This is a mountainous region. The wheel won’t work here. We need horses.”
Howard Schultz, Starbucks’ CEO, shares how the original founders of Starbucks were reluctant to change. He says: “when I tasted my very first espresso in Italy, I was captivated by the romance of the café atmosphere. At the time Starbucks only sold whole bean coffee and had no seating. I had a vision of creating specialty coffee stores. The founders of Starbucks, however, weren’t interested in my idea.”
To overcome the “That won’t work here” barrier, what works well is to have some people implement it first (be it customers or colleagues) and then share the success with others. To introduce a 3% cash discount to a client, we explain that the annualized return is 43%, take pictures of the first client signing up for it, and then show it to other clients.
It wasn’t invented here. One of the major obstacles to spread Best Practices is resistance by top management, be it the President of a country or the head of a company. During Board discussions, their worry actually is: “This will make them look smarter than us.” Overall, the best approach is for top management to become role models of change. A leader who has the humility to go around telling others that “I learned this from a competitor” will foster such a culture.
My way is better. According to The Economist, 80% of drivers think they are “above average.” The problem with driving, inventory management, teaching, M&A integration, ironing and how to increase prices (order is intentional), is the subjective definition of better. This one is best to tackle in one of three ways, depending on the merits of the argument.
One of the things that I like most about Best Practices is that they show the ingenuity of people to overcome obstacles.
How to implement Best Practices
1. Start with the easiest implementation. In CPG companies, we typically do test markets in smaller cities, to prove the concept works. Having implemented SAP in over 100 countries, I always recommend doing it first in the easiest location. Once, for a Shared Service Center implementation, a colleague pointed out that we should start on a tough location, because “if we can do it there we can do it anywhere.” The claim did have some merit, and it rhymed with Frank Sinatra’s “New York, New York”. But it failed.
2. Admit there will be losers. “Financial Giants Are Moving Jobs Off Wall Street”, reported the New York Times in 2012. Since then, cuts at Citi, Deutsche Bank, RBS, JPMorgan Chase and others have continued. Acknowledging the truth works best. For those who will suffer due to a change, the target should be to make people whole. In one case, we ensured that colleagues losing their job would “find a job which is as good or better than the one they had.” They did. In many cases, the change involves reductions of power or responsibility. Being “flexible” about it makes a difference.
3. Sell the benefits of change. You could ignore colleagues or customers who don’t agree, coerce them to leave, or fire them. It doesn’t work. In North America, Europe, Asia, and Latin America, selling the benefits of the change worked better. We could tell customers that we won’t sell to them unless they sign up for direct debit. One of our competitors does that. It has worked better to explain to them that “they will be able to have dinner with their families, instead of looking for a pen, an envelope, and a stamp and worrying theirs would be one of 88 million pieces of mail lost by the Postal Service.”
4. Make it easy to change. When we introduced solutions to clients in Europe, I shared with my colleagues that we should copy Walmart’s policy in America: “you can return any product for any reason for a full refund.” Thus, instead of requiring clients to give us 30 days’ notice to change a payment method, as our competitors did, they were able to cancel the same day. By doing that, we achieved an 80% market penetration in 6 months, a worldwide benchmark. The opposite effect has also been proven: students who have to fill in a 10 pages application to refinance a loan are much less likely to do it.
5. Enable colleagues to shine. Colleagues will be thrilled to document, present and share Best Practices with others. During our annual budget training in Asia, Europe, and the Americas, we had one session specifically devoted to Best Practices. It was a tremendous success. The credit here goes to my manager, who let me organize it, despite the expense.
6. Learn from Diplomats. Expatriates accelerate Best Practices. Companies that deploy expats disseminate Best Practices faster than those which just “send an email from headquarters asking people to do it.” People are more likely to embrace change if they trust management. This works at all levels. Supervisors and managers who go on international assignments, both to and from headquarters as well as among companies, became ambassadors of change. They spread Best Practices more easily because they know people here and there. To note, this doesn’t need to be international. A colleague of mine, who is a Managing Director in New Jersey, sustains that California is a different country. We sent younger colleagues from California to work for him, and it appears he is changing his mind. Disclaimer: mine is a biased opinion. I lived in 9 countries and traveled to 192 countries to spread Best Practices.
NGOs and NonProfits can benefit from how companies manage change and Best Practices. It starts with “Put yourself in his or her shoes”. The 3 most common objections to change are: It Won’t work here, It wasn’t invented here, (This will make them look smarter than us) and My Way is Better. There are 6 ways to overcome such resistance which have been successful in North America, Latin America, Europe, Asia, Africa, and the Pacific. People have tremendous ingenuity to overcome obstacles. And they will be thrilled to share Best Practices with others.