CURT NICKISCH: Welcome to the HBR IdeaCast from Harvard Business Review. I’m Curt Nickisch.
Here are some phrases you might here in an organization. “We tried that before, but it didn’t work. If it ain’t broke, don’t fix it. Well, that’s the way we’ve always done things around here.” Now sometimes those reactions to a new idea or suggestion are based on good experience, and they’re uttered by well-intentioned people. Other times, those phrases can be a tell. A tell that you’re at an organization with too much inertia, too much decision paralysis, too many people stuck in their ways and processes.
To change that, you have to do more than just run a couple of experiments. It takes a reset, according to today’s guest. Dan Heath is a Senior Fellow at Duke University’s Fuqua School of Business. His new book is Reset: How to Change What’s Not Working. Dan, thanks for joining us.
DAN HEATH: Thanks so much, Curt.
CURT NICKISCH: I think the idea of being stuck is something that almost everyone can relate to, whether it’s in your own career or your own behavior patterns. Or just, as we’re going to talk about today, being mired in dysfunctional and inefficient work systems. How does it come about that people get to that point of, “Well, that’s just how things are and I can’t change them?”
DAN HEATH: I think there are a few reasons. I remember Michael Jordan had a great quote: “Practice doesn’t make perfect,” which is what you hear a lot of times. “Practice makes permanent.” If you have practiced every day shooting a jump shot the wrong way, you’re just going to get really good at shooting the wrong form of jump shot. Routines lock in.
One reason we get stuck is that every day, we come to work and we practice the way things worked yesterday. And every day is providing new data that suggests yesterday’s performance is what we’re capable of. That’s part of what we have to react to to get unstuck, is to set our sights anew and to realize that we can escape the gravity of the way things have always worked.
CURT NICKISCH: And is that why so many change attempts fail?
DAN HEATH: Yeah. If you think about the practice metaphor again, if you’ve been shooting the wrong kind of jump shot and you’ve had thousands of reps with that form, of course it’s going to be difficult to change. In fact, I use the metaphor in the book of a boulder that’s in your way. If you picture somebody on a road and there’s a boulder between them and where they’re trying to get to. A lot of times, what we try to put our shoulder into the boulder. We think maybe if we work a little bit harder, if we just try a little bit more, we’re going to move that boulder. It just doesn’t work when it comes to systems.
One of my favorite quotes in the book is from a healthcare expert named Paul Batalden who said, “Every system is perfectly designed to get the results it gets.” That quote has stuck with me so much because what is says is if we are mired, then that is not like a transitional state. That’s not something that’s going to go away like a cold, or it’s not something you just hustle your way out of. It’s a function of the system we’re operating in. To change that, we’ve got to change the system.
In the book, I’m proposing a two-part framework to get people and teams out of situations like that. The first part is to find leverage points which are interventions or actions that have disproportionate return. If you do a little bit of work, you get a lot back. In the boulder metaphor, if you picture a fulcrum and a lever being inserted into the picture, where all of a sudden it’s not just a person shoving the boulder, but it’s the potential to use amplified force to move the boulder. That’s part one.
CURT NICKISCH: Yeah. Even if you don’t move it, you’re like, “Hey, we just wiggled it, the seemingly immovable thing.”
DAN HEATH: Exactly right. Progress is really what turns change into a flywheel, what sustains change. Then if you visualize the lever and the fulcrum and the boulder, in order for the boulder to move, you’ve got to push on the other end of that lever. And that means resources.
And this is the second big pickle in the book. The first is how do you find a place where a little bit of action goes a long way. And the second is if you need resources to push in a new direction, and you’re not just swimming in extra cash and employees, that means you’re going to have to somehow reshuffle the way you’re using the people, and the systems, and the technology, and the money you have today to get different results. And so the second part is about re-stacking resources to push in a new direction.
CURT NICKISCH: Let’s start with a first step, the first step to change what isn’t working. That’s to actually identify the issue. That’s a common problem-solving technique that we’ve often heard. First, identify the problem before you start to go out and try to solve it, and that people often jump over that. What do you recommend for that?
DAN HEATH: “Go and see the work.” That’s a phrase I stole from a management professor named Nelson Repenning who’s at MIT. In fact, the very first story in the book is about a receiving area at a hospital, they’re taking in packages and getting them delivered to the appropriate places within the hospital. At the point when the work began, they had had an average performance of three days to get packages delivered within the hospital. A nurse orders some medicine, FedEx or UPS get it across the country in a day or two. Then to get from the basement of the hospital to the third or fourth floor, whatever, it took another three days, which is just crazy. But it didn’t feel crazy to the people in the receiving area.
Back to the notion of, “Every system is perfectly designed to get the results it gets.” It had been that way for years. The system had been baked to execute that level of performance. A new manager came in, a guy named Paul Suett. He had a background in lean manufacturing, so he immediately spotted some things that were askew. But he also was wise enough to realize, “It’s not enough for me to come in and know the right answer. I’ve got to get my team to see the situation the way I do, and to be motivated to do something.” He drafted them into the cause.
Back to the notion of going and seeing the work, they spent an hour a day for 12 days in a row, they just paused their work, and they all walked the flow from where the packages came in on the delivery dock, through the inventory scanning, through the sorting, ultimately to the destinations in the hospital. The signature thing that they found that was causing unnecessary delays was that they had employed batch processes in a lot of places where they didn’t need to be inserted.
Of course, batch processes are where you wait to do something in the spirit of efficiency. We all wait to do our laundry until we’ve got a load, or a dishwasher. Nobody just washes one spoon at a time, you wait to get a proper load. That was the way they had been thinking about this. If you’ve got to scan packages into inventory for instance, it makes sense, wait until you’ve got 10, or 15, or whatever. Then you can go zap, zap, zap, zap, zap. Intuitively, it seems like it would be more efficient. But what Paul Suett saw is our metaphor should be to let the river flow.
Meaning a package should be able to travel unencumbered from the delivery dock to its destination, and our job should be to remove friction. So they all do this walk of the process together and it doesn’t take long once you realize where the sticky points are. It took them six weeks to cut delays in half. In six weeks, they go from three days to a day-and-a-half. Then in another six weeks, 90% of the destinations in the hospital were receiving daily deliveries.
That’s what I think is so powerful about this approach is that, number one, you’ve got to change the system. Which sounds really hard, “Oh, gosh, how would we ever change the system?” It sounds bigger than just shoving on the boulder. But when you figure out the things that can improve the system, often the results can happen very, very quickly and lock in.
CURT NICKISCH: Tell me just a little bit more about the leadership that was shown there. What did Paul Suett say in that situation to not just have this be, “Okay, we’re changing how this one thing is done this way,” to becoming a system where people said, “Oh, well that’s working better. What if we did this now?”
DAN HEATH: He signaled to them he was going to be listening not just talking. The first thing he did, actually even before they began this hour a day thing, was ask them about their complaints. What can I do to help make your day day-to-day life easier? They were saying things like, “Well, some of these carts that we use to push the packages around have those gummed-up, jangly wheels,” like you get in the supermarket sometimes. Paul just instantly said, “You shouldn’t have to deal with that. I’m going to get you new wheels or new carts, or whatever you need. Let’s remove that source of friction.”
CURT NICKISCH: Even though he knew that that wasn’t the thing that’s actually causing an extra two days of delays?
DAN HEATH: Exactly right. When you’re talking about change, motivation is the game. What Suett is doing is he’s saying, “I’ve got to have this team aligned with me. They’ve got to want to do this.”
CURT NICKISCH: You also write about defining the goal of the goal to help people in this process. How does that relate?
DAN HEATH: So in organizations, we are obsessed with goals. We want to reduce this number by 15%, we want to double this, reduce share in such-and-such, whatever. It’s helpful to have a second layer process where we can continually ask ourselves, “What’s the goal of the goal?”
I’ll give you an example. I write about this guy who bought a Ram truck. He takes the truck off the lot, and then he starts getting hounded to fill out a survey. I think we’ve probably all had this experience in a variety of domains. But he hears from maybe a half-dozen people at least a dozen times within about a week. “Hey, Ryan, could you fill out this survey for us? We’d really appreciate positive responses. Hey, really looking forward to getting the results. We want to improve,” blah, blah, blah. “What could we have done better?”
Ryan Davidson himself, he works in customer experience in healthcare. He threw them a bone and sat down, wrote up a proper survey. He said it was an A-minus. He was generally happy, but some things really bugged him. He sends it back over the transom. Then he never hears from anyone again, except for his sales rep who starts texting him the day he submits the survey, complaining that the sales rep wasn’t given all 10 out of 10s.
That is just a charade of customer data. And if you rewind the tape, you can imagine what must have happened. In the beginning, there was surely good intentions here. Some leader said, “We genuinely want to provide a good experience for our customers because we want them to come back and buy more trucks in the future. How do we start getting closer to that goal? Well, let’s gather some data. Let’s get a survey at the end of every transaction and let’s see how we’re doing. If we’re not doing so good, we can change things. If we are doing good, we’ll keep doing what we’re doing.” All that’s great.
It’s exactly what you should do. You should be trying to learn, you should be listening. But then the translation that occurs is … There’s a famous law called Goodhart’s Law which is, “When a measure becomes a target, it ceases to be a good measure.” In other words, what must have happened at this dealership is they started layering on incentives, it may be sticks, it may be carrots and sticks in this case. “We need 10 out of 10s, that’s what we’re aiming for.” Then all of a sudden, this measure supplants the mission. They’re not getting better at delivering a good customer experience. They’re getting better at browbeating customers into giving them falsely inflated scores. That is just completely absurd, but it locks in.
That’s where this question about what’s the goal of the goal can fit in, is that I’m encouraging leaders to not take goals and measurements for granted, to not let them become enshrined at the expense of our ultimate mission. I do have empathy for the salesperson at the dealership that probably has a bonus that’s going to make a difference for their family, what they can afford to buy for Christmas for their kids, or whatever.
CURT NICKISCH: Yeah, yeah, yeah. For sure.
DAN HEATH: And so that’s why this has got to be a systems level process. I think it’s probably foolish to expect the sales reps to just uniquely rely on their own personal morality to opt out of these systems that have been enshrined around them.
CURT NICKISCH: Well, let’s talk about resetting then, when you’re enshrined in those systems. You recommend starting with a burst of energy and focus.
DAN HEATH: I think a useful metaphor here is if you’ve ever tried to raise a stuck window. You know that it takes this tremendous force upfront to get the window moving at all. Then once it’s moving, it requires substantially less energy to keep it moving. That’s the idea of a burst. That when you’re in these entrenched systems dealing with habits, it really helps to have some dedicated time, some density of collaboration.
One of my favorite examples is this attorney named Greg McLawsen. He told a story about helping his wife get their garden set up. She had this plan to set up these irrigation hoses to keep things watered. His job was to go to Home Depot and get all the supplies. He talked about what he called the Immutable Law of the Universe which is, “That no DIY home project can be completed with a single trip to Home Depot,” which I thought was just brilliant.
Sure enough, that holds true in this particular case. He sets things up and he realizes one of the parts he bought doesn’t work. He’s left in this dilemma. It’s a $5 part and it just seems so wasteful to him to go back to Home Depot just for that. He described it, “It would probably take him $8 in gas and $150 in billable hours,” to go and fetch that part independently. From an efficiency perspective you think, “Okay, we’ll just add that to the next shopping list,” and then pick it up a week or two later, whenever you go back.
But he said, from his wife’s perspective, that’s the wrong way to think about it. She doesn’t care about think efficiency. What she cares about is being able to water plants. That this project is not valuable until it has been worked to completion. He immediately realized that he was doing the same thing at work with his law practice. In the spirit of efficiency, he was handling tasks in different ways to the extent that he might have a half-dozen or a dozen different projects for clients that were in the 80th or 90th percentile completion. But as he realized, these legal plans and documents are not useful until they’re finished. “I can’t bill for them, my clients can’t put them into action.”
It’s interesting to realize that there’s this tension between efficiency, which is so baked into the way we think about our work, and effectiveness. The notion of a burst is if you can start out with a day or a week of dedicated work to get to some kind of outcome, even if that work within the burst itself might be “inefficient,” if you can accomplish something then that starts to give you those little rays of hope that maybe it’s possible to move that boulder.
CURT NICKISCH: When it comes to becoming a little bit less efficient then, maybe in how you’re working … Sometimes trying to move that boulder, or you realize what it’s going to take to move that boulder, is to not put resources towards one thing and put resources to another. And that can get political. How do you approach navigating that thinking of I need to shift resources? How to make that choice and how to explain that political choice?
DAN HEATH: Yeah. That is really the heart of the second part of the framework, the notion of re-stacking resources. The idea is where do we get the fuel to push in a new direction, when all of that fuel, most likely, is presently employed.
One motivation came from, I had a conversation with this guy who’s a consultant at a firm called Strategex. They are obsessed with the Pareto principle. I’m sure all listeners are familiar with this, the 20-80 rule. There’s a bunch of different formulations of this, but one you’ve probably heard is, “20% of your customers account for 80% of your revenue.”
Now interestingly, the consultant David Philipi told me that it’s even more distorted with profitability. 20% of your customers might be 80% of your revenue, but they might be 150% of your profit. Meaning that there’s a whole chunk of your customers who are unprofitable. You would have been better off in almost every respect other than top-line revenue by just cutting them loose.
CURT NICKISCH: Yeah. They’re being subsidized by this other great customer. Yeah.
DAN HEATH: That’s exactly right, they’re being subsidized by your best customers. Philipi described this tool that they use for customers that I thought had resonance well beyond the realm of profitability. He said they’ll do this thing where they go in and tease apart what’s the profitability by customer.
That sounds like a simple thing, but you’d be surprised how few businesses actually have that level of visibility. It’s difficult. Because it might be easy to assign costs based on what people ordered, the cost of the machine part or whatever that they requested, but it’s hard to allocate labor. You’ve got G&A, and you’ve got support costs, and what about marketing, do you include that.
They do this hard analysis to get to customer-level profitability. Then they force-rank all the customers from most to least profitable. But here was what really stuck with me. He said in virtually every case, you find that those customers at the very tip-top are under-coddled, and the customers at the very bottom are over-coddled. A classic example of this had to do with on-time deliveries. He said, “Repeatedly, we found that the best customers, for instance for a manufacturer, will have worse on-time delivery rates than the worst customers.” You’d think to yourself, “Well, how could that possibly be? How do you not know who your best customers are and treat them with extra white gloves, and so forth?” The answer is the people at the bottom might just be buying a random part here and there, so you can just put one thing in a box and ship it out, and it’s super simple. The people at the top who are spending millions with you might have these complicated assemblies, and it might take time, and there are dependencies, and you might procrastinate it a little bit.
If you zoom out from this analysis, what we’re seeing is there’s under-coddled people at the top, and over-coddled at the bottom. That, in essence, is a kind of repeatable engine for finding resources. In other words, you could do that same analysis based on the projects that are underway at work. Which are the most effective to the least? You could even do it on an individual basis in your own relationships in your life. Who are the people at the very top? Are you, in essence, subsidizing your worst relationships by stealing time from your partner, your kids, your best friends? The people who see the minutes and time that they can spend with you diminished by those people at the very bottom of the ledger.
If we need fuel to push in a new direction, the very best place to look is where is that fuel currently being deployed in the least effective way? Can we go there and steal some of that fuel to redeploy in a better way?
CURT NICKISCH: And how do you get people to do that? It can be hard. How do you get people to let go of some of that work?
DAN HEATH: It’s a great question. In fact, Philipi told me they’ve just done this analysis that shows business leaders, “Hey, you have some customers that are hugely unprofitable.” But even so, even facing into those facts, the leaders say, “Well, gosh, I want people to feel like I’m treating customers the same. I don’t want to just tell them to get lost. What happens if we get a bad review?” All this anxiety is dredged up by the idea of kicking customers out the door.
CURT NICKISCH: Yeah. They’ve been “great customers” for years.
DAN HEATH: Yeah, they’ve been with you for years. Philipi said, “The answer is not to kick them out. The answer to change the offer.” He said, “A business’ job is to define the offer, and a customer’s job is to figure out whether they want to accept it or not.” Changing the offer might mean is there a minimum order size? Could you raise prices somewhat? Could you lower expectations on delivery time for customers below a certain scale? Could you offer them self-service tools so maybe they’re not eating as much of your support time, and so forth? By reconfiguring the bundle, you can trust them to make the decision for them while making sure you’re not draining resources in an unjustified way.
CURT NICKISCH: You can make those decisions from the leadership level of an organization. How do you get people to go along with that process? How do you motivate people to go along with these changes?
DAN HEATH: This is a critical theme in the book. That anytime there’s a change effort, motivation is at the center of it. One of the things I pick on in the book is this notion of buy in that we’ve all heard so much about. That leaders should seek buy in for their ideas. I make this snarky remark that what buy in means is that you’re trying to convince your people to want what you want instead of what they want. To be clear, I don’t think it’s a bad idea to try to persuade people of a new vision or a new idea. But I do think there’s a simpler recipe and a more effective recipe than buy in.
If you imagine a Venn diagram in your mind, and one circle is the bundle of activities that are going to be needed to succeed at change. Whatever change you have formulated, a bunch of stuff is going to have to happen for you to succeed. That’s circle one. Then the second intersecting circle is what are the things that your employees would do if they were boss? What did they wish would change? What would they love to see happen today? If there is any intersection between those two circles … If there’s not, by the way, I think you’ve got the wrong change mission. There’s almost always going to be an intersection. The intersection is where you start the change. In other words, we got to seek out the intersection of what’s required and what’s desired.
And that seems like the simplest, dumbest idea in the world. How could you not start with what people want to do? But what you’ll find is it doesn’t happen that much in the wild. Because what typically happens is you become aware of some need, some new strategic direction, some new strategic priority. The smart leaders go off in a room, and they put on their analytical hats, and they map out the closest route from where we are today to where we need to be in a year, or three years, or whatever.
But if you have left motivation out of that formula, you’ve unwittingly left out the single-most important variable in the whole equation. Even if your line is analytically the straightest one between two points, if there’s an alternate path that is meandering and three-times as long on paper, but it’s the one that people are fired up, frothing at the mouth to achieve, you’d be crazy not to pick that one. That’s what I mean by we’ve got to be alert to the ability to tap motivation.
CURT NICKISCH: What about situations where the inefficiency or the stuck-ness of the system is serving some team members? Isn’t that a lot harder to change?
DAN HEATH: It is, yeah. I think in almost every change situation, I’ve heard this 20-60-20 thing from enough leaders I’ve come to believe there must be some folk wisdom behind it. That in any change, you’re going to have 20% advocates or zealots. You’re going to have 60% that are indifferent. And then 20% that are opponents. I literally have had several different leaders play those exact numbers to me.
Now I want to say, I think the spirit of the book is you shouldn’t be satisfied with 20% in the spirit of tapping motivation. I think if you get out of the habit of trying to get people to want what you want, and you look instead for what people want, I think that number goes up.
But anyway, to the point of your question, what do you ever do about those 20% resisters? I think there are a couple of strategies that you can use in almost every case. It doesn’t mean it’s easy, but these are evergreen strategies. One is what kind of barter can you make? You play along with this mission, I realize this isn’t the direction you want to go. Is there something that we can do for you? In the spirit of those gummed-up wheels on the carts that we talked about earlier. Maybe I can make this easier, even as you endure this thing that you don’t want. That’s strategy one.
I think strategy two is even if the direction of the change is undesired, people’s roles within the change can often make it more motivating. In other words, even if I’m trying to eliminate the batch processes at work in the receiving area and you don’t think that’s a good idea, if I can give you more of the kind of work you like to do, maybe it’s still a good trade for you. Maybe you like to do more of the systems-level work and less of the manual shuttling of packages within the hospital. That’s another dimension of a trade that could be made.
I think the third lens is usually the most powerful. That is progress. Progress is the spark that makes believers of skeptics. In other words, you take the energy of those zealots, you remember motivation is the signature fuel to push in some new direction, so you do something. You do some good work. You find a good leverage point and you realize, “Hey, we can move the boulder a couple of inches.” Then you go back to the skeptics and you’re like, “See? That boulder that we’ve been living with for years, it actually is moveable. We just moved it. Does that change your opinion?” I think over time, that sense of progress and all of the self-efficacy that comes with it is the engine by which 20% resisters goes to 18%, goes to 15%, goes to 12.%
CURT NICKISCH: What can a team member do to encourage their leader to initiate this process?
DAN HEATH: It’s a great question. I think the best approach is to sell the problem before you sell the solution. We talked earlier about the power of going and seeing the work. Nelson Repenning shared this example of a paper manufacturer that made corrugated boxes. At lunchtime, they shut down the main corrugating machine. They’ve been doing this for years, and years, and years. After some investigation, they figure out that this was the legacy of a time when the local electrical utility was having some instability. They figured out, “Hey, it’s worse around lunchtime. We’ll just proactively shut down this machine to save the wear-and-tear from the instability.” Then it had locked in as a habit. Years later, they were still doing this thing. The utility had long since fixed the original problem that spawned that response, but they hadn’t realized it.
If you’re the employee, back to your question, I think what you want to do is be as concrete as possible and as specific as possible about the problem. Take your boss out there one day at lunchtime and say, “You know, we always shut down this corrugating machine. Why do we do that? Because we’re losing an hour every time, and then starting it up and shutting it down, it’s wasting paper. I’m just curious if there’s any way around that?”
It reminds me of the Change Guru John Kotter has this great model where he says that what sparks change in organizations is when people see something that makes them feel something that opens their mind to change. It’s see, feel, change. It’s you see the corrugator machine shut down. It makes you feel curious, it makes you feel anxious. Why are we losing all this production time? That opens the door to change.
CURT NICKISCH: Dan, this has been great. Thanks so much for coming on the show to talk about it.
DAN HEATH: Curt, it’s been a pleasure. Thank you.
CURT NICKISCH: That’s Dan Heath, author of the new book Reset: How to Change What’s Not Working. Want to change more things that aren’t working for you? We have over 1000 episodes and more podcasts to help you manage your team, your organization, and your career. Find them at hbr.org/podcasts, or search HBR in Apple Podcasts, Spotify, or wherever you listen.
Thanks to our team, Senior Producer Mary Dooe, Associate Producer Hannah, Audio Product Manager Ian Fox, and Senior Production Specialist Rob Eckhardt. Thank you for listening to the HBR IdeaCast. We’ll be back on Tuesday with our next episode. I’m Curt Nickisch.
