The Cost of Fear in Organisational Change

We are attracted to change, while at the same time perceiving it as a threat. 

This might very well be the creative tension that humanity’s narrative unfolds, which we call history.  We are curious; and learning is one of our most important drivers. And we are uncomfortable with uncertainty; we need reassurance. The way we like to deal with our contradicting curiosity and sense of threat is through… planning. In our personal life, we easily admit that our plans are just wishful thinking. We may admit this so easily that sadly we tend to become skeptical about our bold plans. And we cut ourselves off from our dreams. On the other hand, in our professional life we believe that our wishful thinking is the only acceptable reality, and we instill a state of denial in ourselves. Whenever a little inner voice tells us that the universe doesn’t care about our reality, we often seek reassurance via complex planning: we perform risk management, estimation of time to complete tasks … and analyse everything-that-could-happen-in-the-future. All these tasks, needed to reinforce our self-reassurance about our ability to control the future, come with a cost. I call it the cost of fear. 

The (Agile) change: from intention to action

Organisations today aim to adapt to a more collaborative, customer-centric, flexible format. Leaders have a genuine intention of creating an Agile organisation where people thrive and are allowed to make mistakes, as long as they learn from their errors. Experimentation will be the new approach. 

This is the dream, the quest, the purpose.  And we have the “status-quo” of hierarchical organisations, annual targets and budgeting. We have all sorts of planning activities. This is our “status-quo”. The art of  storytelling, calls the contradiction between the purpose and the status-quo, “creative tension”. As in all of humanity’s history,  this “tension longing for change”,, operates also in the business environment.

How can we truly step out of the status-quo and create a new (hi)story for the future of the business place?

Without trying to answer this completely, let’s take a first step: let’s start by looking at the status quo’s impact on the aspiration to change.

Peter Senge says that true tension is born when the theory exposed (what I aspire to) is different from the theory in action (what I actually do). If the tension is acknowledged, learning can occur. Effective alignment between the exposed theory and the theory in action can be achieved. Senge, in his book The Fifth Discipline, says “tension is an opportunity for learning”.

If you're familiar with coaching terms, seeking alignment between intentions/speech and actions is called "congruence". How can we achieve congruence?

I believe the only magic formula for addressing the gap is acknowledging the gap. Is this easy?

No! Why? Because we genuinely believe that when we verbalise something, it means that we will really enact it.  

Our first trap is trying to achieve change with our status quo’s tools

In this regard the most common example at hand is the temptation to "plan the change". Traditionally, we have believed that planning is "a professional attitude", and change agents are to present “the change strategy”. Strategy and plans are tools used to reassure us. The further out of our comfort zone we are, the more we need to be reassured, and the more these tools become liabilities.

The cost of fear is reflected in the gap between the needs of the ecosystem (market, customers, teams, organisations) and the organisation’s self-defence as an attempt to control the ecosystem they operate in.

The cost of fear, a systemic description

Systems have self-regulating actions called “feed-back loops”. A feed-back loop may be either reinforcing-  system behaviour is reinforced by the feed-back loop, the Cold War period being an example- or balancing, where the system is regulated to stay within given boundaries.

I think the cost of fear is causes a reinforcing loop that leads to the growing frustration of leaders and increasing organisational bureaucracy.

Here are some sources that sum-up important costs for organisations. I call sum of these costs,  "the cost of fear": 

1) Continuous planning vs continuous delivery 

Planning as a reassuring activity, addressing the fear of not being in control, was already mentioned above. 

Over planning requires stakeholders and teams to be involved and spend (sometimes) an impressive amount of time in planning meetings. While planning is happening, the decision to deliver is deferred.

As long as planning is on the agenda, value does not reach customers. 

The cost of fear is the cost of continuous planning.

2) Ongoing estimation and frozen development 

Think of a multi-skilled team of developers, product owners, testers, etc. of more that 10 people focused on estimating a backlog's User Stories for six weeks in a row, with no delivery activity. Meanwhile, very resourceful people in management positions eventually spend at least half of their time making decisions and speculating about the (unknowable) future,.No development or delivery happens before leaders are reassured with a number (an estimation).

In the same example the team, under pressure to deliver “visibility”, had to spend all their time estimating the potential possible cases during six long weeks. Let’s look at the different shades of fear in this set-up:

teams experience panic mixed with frustration because they have the triple responsibility of “being right”, they must rapidly identify what “being right is”, and deliver that “right thing” in a context in which they cannot possibly have control.

Managers experience the anxiety of not being able to control the process efficiently, mixed with the frustration of not having the right decision at hand.

The value of an approach like NoEstimates(a domain in which Vasco Duarte and Woody Zulli have had major contributions), lies also in reducing the delay of delivery.

While estimation is ongoing, no value reaches customers. 

The cost of fear lies in the cost of ongoing estimation. The roots of this locked-in situation are in a system of interaction between people based on lack of trust.

Lack of trust blocks value delivery to customers and skyrockets the cost of fear. 

3) Bind-in budgeting

This activity is intimately linked to the former one because it is a result of estimation and planning, nevertheless it has a specific dimension: locked-in choices for an uncertain future. Beyond investing a lot of time in forecasting what we will eventually need in the next period (probably the next year…), budgeting is often a way of removing options of adapting to a changing context.

Not being able to deliver value to customers because un-budgeted resources are needed is a good example of locked-in options. This is the case in the following example.

Think of a team starting a new initiative. There is a lot of motivation to work in an Agile way. While the people start working together they quickly realise there will be no true valuable outcome if there are no software skills in the team. Think of the same team, working on this strategic project but not being able to hire any development skills, because this type of skill was not in the budget for that time-frame, as the project was in its early stages and only business experts and designers were expected to work on it. This example illustrates how important it is to align a budgeting approach with delivery dynamics.

Creating budgets for projects in waterfall thinking and then attempting to implement them in an Agile way adds confusion, frustration and fades-out a team’s commitment. In this example the extended cost of delay is linked to the anxiety of not wanting to go over budget. Addressing this anxiety by sticking to the budget enhances the cost of delayed value-to-customer delivery.

Budgeting with locked options is like booking a flight with fixed dates and conditions. It is cheaper, but there is no option. Options have value, as the model of Real Options by Christ Mattsreflects. Not offering options increases the cost of our fear of being reckless with a company’s money. 

4) Risk management vs emerging architecture

Locking our options with early decisions about a future product’s architecture is another way we address our need of being reassured that the future will behave as we want it to.  Personally, I am still recovering from IT architecture committees I was in many, many years ago ;). The protocol is the following: a lot of truly talented experts meet to analyse the risks of the future and address them with a list of operational actions or adequate designing. Usually these Risk Management committees end up with a deferred decision, as a new risk is discovered as the committee meeting is closing, and has to be addressed and discussed over the next one. 

As an example, think of a couple of multi-skilled teams: product owners, business analysts, testers. These teams can move forward only using the models other teams of architects have defined and validated. If an architect’s responsibility is to create the exhaustive no-risk architecture for a full information system, giving it a go is a scary decision. In this situation, the effect of the preserving behaviour is the following: 

After costly meetings, the only decision is to defer decisions.

While analysing risks, no solution is emerging and no value reaches the customer. 

In the meantime, delivery teams are blocked, and at the same time assessed as not being fast enough in delivery and/or not doing things in the – as yet undecided - “state of art”. 

The cost of fear is the cost of focusing on risk management.

The cost of fear is the cost of mutual blame in a blocked situation. 

How to reduce the cost of fear?

Well, part of the answer is in the titles of the paragraphs above, but to pin it in only one word, it would be: experiment! 

Experimentation has magic powers for two reasons. One is the mindset trigger where we know we are allowed to both try andto be wrong. Another one is the reinforcement of the organisation’s learning path. Moreover, as individuals we are rewarded when true learning is fun; learning is true food that keeps our brain happy.

Here is the collection of principles that (may) reduce the cost of fear:

• Deliver a prototype rather than plan
• Define team capacity rather than estimate tasks 
• Drive by emerging design (helpful reference in Alexandru Bolboaca's work), rather than performing risk management

The cost of delay is part of the cost of fear, as we don't act until we are reassured.

Okay, this looks like a reduce-cost-of-fear-principles-just-to-try cheat-sheet.  That's not enough. An additional question to answer is, "How can we address the fear that generates these costs?". And this is the trickiest question. Fear is the strongest indicator that some basic needs are not met. 

Just telling leaders/managers/architects/teams/stakeholders/decision makers that their actions are not aligned with their intention (of delivering true value to customers fast, collaboration, self-empowerment, test & learn) is simply not enough. 

Would you be braver if someone just told you "don't be afraid!"?

Addressing fear requires compassion, listening and observation.

To address fear one ultimately needs a psychologically safe environment. 

The first step in creating a psychologically safe environment is to acknowledge that fear is a sane emotion. Fear keeps us alive, so the first thing would be to say good-bye to the “hero-on-duty” belief.

I will wrap-up this article with a gentle request to all system designers, whatever their job title is: 

Lower your organisation’s cost of fear by increasing the psychological safety of people who are part of it. Including yourself

About the Author

Oana Juncu likes to call herself an Agile Business DJ, who mixes whatever practices of collective intelligence, from Agile to TheoryU  help people, teams and organisations to become proud of their outcomes and delight their customers. After 15 years of experience in Software Development and System Management has driven Oana to embrace Agile and Lean mind set, principles and practices, that she believes are the most effective approaches for 21st century lead organizations willing to focus on quality products with high impact on the market. She recently embraced the entrepreneurship path by founding cOemerge, a company that helps its large or smaller clients grow  Agility and entrepreneurial mindset  through Lean Startup.